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Unformatted text preview: 5%) % Change in Q = 15% % Change in Q D derived from Price Elasticity : Price Elasticity =% Change in Q % Change in Price1.2 = % Change in Q . % 2 5 (Sub in Given values) % Change in Q = 1.2 * ( 2.5%) % Change in Q = 3 % Net % Change in Q D = + = 15% + 3% = 12% Therefore, Sales of cars during the recession will DECREASE BY 12% . The $500 discount will not increase total revenue since the sales of cars will decrease by 12% even with the discount taken into account....
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This note was uploaded on 12/16/2010 for the course ECON 101 taught by Professor Vanderwaal during the Fall '08 term at Waterloo.
 Fall '08
 VANDERWAAL
 Economics, Income Elasticity

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