How much should domestic automakers increase the price

Assignment Help Econometrics

Reference no: EM13182590

A researcher estimated that the price elasticity of demand for automobiles in the U.S. is -1.2, while the income elasticity off demand is 3.0. Next year, U.S. automakers intend to increase the average price of automobiles by 5 percent, and they expect consumers' disposable income to rise by 3 percent.

(a) If sales of domestically produced automobiles are 8M in this year, how many automobiles do you expect U.S. automakers to sell next year?

(b) by how much should domestic automakers increase the price of automobiles if they wish to increase sales by 5 percent next year?

Reference no: EM13182590

Questions Cloud

Wise judgment scenario : Choose one of the following scenarios and discuss how each of the five components of wise judgments can be applied to the scenario you have chosen. Then, make a decision based on the five components.

Can a small group of well organized activists : Human rights groups, environmental activists, and other interest groups concerned with unethical business practices have often conducted publicity campaigns against various corporations that those groups feel have engaged in unethical practices.

What is the maximum value of the hhi : AT&T: 38.3% Verizon: 31.3% Sprint: 15.9% T-Mobile: 12.2% Other: 2.3% What is the maximum value of the HHI (a) Before the AT&T/T-Mobile deal? (b) If AT&T buys T-Mobile?

Calculate the breakeven - comparative income statements : Compute the allocation rate that was used for the manufacturing overhead in Exhibits 2 and 3. Show your computations in enough detail and with enough organization

How much should domestic automakers increase the price : A researcher estimated that the price elasticity of demand for automobiles in the U.S. is -1.2, while the income elasticity off demand is 3.0. Next year, U.S. automakers intend to increase the average price of automobiles by 5 percent, and they ex..

Era of modern policing-characterized by extensive corruption : Which era of modern policing is characterized by extensive corruption that overshadowed the social service efforts of police during this time period?

What pricing policy should transportation authority adopt : The total operating revenues of a public transportation authority are $100 million while its total operating costs are $120 million. The price of a ride is $1 dollar and the price elasticity of demand for public transportation has been estimated t..

Environmental-ecological footprint : The purpose of this lab is to learn more about how connected you are to the ecosystems and biosphere that you inhabit. You will learn how your everyday choices contribute to the human impacts on our environment you've been learning about. Most import..

What maximum total weight limit on passengers : Your consulting company has been hired by an airline to analyze data on passenger and luggage weights. The data refer to a 200 seat aircraft that is always full. You are given data that show that as a good approximation passenger weights W ~ N (15..

User Account

All Pages