A consultant gives you the following equation which

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A consultant gives you the following equation, which represents the demand for new cars as a function of the price of cars, the price of gasoline, and GDP (i.e., income I) Qcars = (Pcars)2.4 (Pgasoline)-1.2 I2 a. What is the elasticity of demand for new cars with respect to the price of cars? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).

b. What is the elasticity of demand for new cars with respect to the price of gasoline? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).

c. What is the elasticity of demand with respect to income? Comment on and interpret your answer (i.e., the sign and magnitude of the elasticity).

Reference no: EM13375058

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