Illustrate how many would you expect to be sold under each

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Reference no: EM1355394

A number of empirical studies of automobile demand yielded the following estimates of income and price elasticities:

Study Income Elasticity Price Elasticity Chow Alkinson Roos and Von Szeliski Suits 3.0 2.5 2.5 3.9 1.2 1.4 1.5 1.2

Assume that income and price effects on automobile sales are independent and additive. Assume also that the auto companies intend to increase the average price of anautomobile by about 6 percent in the next year and that next year's disposable personal income is expected to be 4 percent higher than this year's. If this year's automobile sales were 11 million units, Illustrate how many would you expect to be sold under each pair of price and income demand elasticity estimates?

Reference no: EM1355394

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