Table 1 Estimated price elasticity of demand and income elasticity of demand Price elasticity of demand Income elasticity of demand Domestic cars Foreign cars? Domestic cars Foreign cars The United State -3.9 to -24.3 -3.1 to -27.5 Malaysia -1.7 to -4.8 -3.1 to -8.2 28.7 20.3 Notes: Domestic cars are Proton and Perodua cars while foreign cars are all foreign car makes including Japanese car assembled locally. The average price for domestic cars and foreign cars of similar size are approximately RM50,000 and RM85,000 respectively. Sources: Berry, Levinsohn, & Pakes (2004), and Lau (2020). 1. Explain in your own word the meaning of: (a) price elasticity of demand (b) income elasticity of demand (2 marks) 2. Explain the possible reason(s) for the difference between the price elasticity of demand for domestic cars and foreign cars in Malaysia. (3 marks) 3. How would you explain the income elasticity of demand for domestic cars and for foreign cars? (2 marks) 4. How would the information in the table affect your plan if you were the sales manager of a sole agent for foreign car distributor