By how much should the u.s. automakers adjust the price

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It has been estimated that the price elasticity of demand for U.S. manufactured automobiles is -1.2, while the income elasticity of demand is 2.0 and the cross price elasticity of demand with respect to the foreign automobiles is 1.5. The current volume of sales for U. S. manufactured automobiles is 10 million per year. It is expected that over the next year the average income of the consumers in the U.S. will increase by 2.5 percent. It has been determined that the price of the foreign imports will increase by 6% over the next year. By how much should the U.S. automakers adjust the price of their automobiles if they wish to increase the volume of their sales by 9.2% next year?

Reference no: EM13160044

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