Own price elasticity of demand for a special type

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In a recent study it has been estimated that the own price elasticity of demand for a special type of U.S. manufactured automobile tires is - .75, while the income elasticity of demand is 1.1 and the cross price elasticity of demand with respect to foreign imports is 1.4. The current sales volume for the U.S. manufactured tires is 5 million units per year. It is expected that over the next year the average income of the target group of consumers in the U.S. will grow by 4%. It is further anticipated that the price of the foreign imports will rise by 5%. Calculate the amount (%) by which the U.S. tire manufacturers can adjust their price if they wish to increase their sales volume by 8.4%.

Reference no: EM13743214

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