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Unit 4 AB224 | Microeconomics Unit 4 Assignment: Elasticity of Demand Name: Course Number and Section: AB224-0X Date: General Instructions for all...
c. Using your answer to part a. above, how could you have predicted this change in total monthly revenue?
3. The Gondwanaland Chairman of Production reported that the new Altair chariots (most modern, horse drawn family chariot) had a PRICE elasticity of 3 and an INCOME elasticity of 2. The supply of these Altair chariots is elastic. Evaluate the following statements and explain why you think they are true, or false.
a. A 20% increase in the price of the Altair chariot will cause the quantity demanded to fall by an astounding 60%.
b. An increase in Gondwanaland consumers’ incomes will cause prices to rise, but the total quantity demanded will also increase.
