HW chap 2

Rev is ed jrl 08092011 worksheet

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Unformatted text preview: diture to increase if demand is inelastic and decrease if demand is elastic. Total expenditure is largest at a price for which the elasticity equals –1. Specifically, e z to.mhe c loud.mc gr a w- hill.c om/hm.tpx? todo= pr intvie w 7/9 1/14/14 Assignme nt Pr int Vie w 9. awar d: 16.70 out of 16.70 points Suppose the annual demand function for the Honda Accord is where PA and PC are the prices of the Accord and the Toyota Camry, respectively (in thousands), and PG is the price of gasoline (per gallon). a. What is the elasticity of demand for the Accord with respect to the price of a Camry when both cars sell for $24,000 and fuel costs $2.75 per gallon? Instructions: Round your answer to 1 decimal place. Include a negative sign if necessary. 596. 3 . b. What is the elasticity with respect to the price of gasoline? Instructions: Round your answer to 2 decimal places. Use a leading zero and include a negative sign if necessary. ­0. 07 . c. Which of the following statements is correct about the market for Honda Accords? The Cam ry is a substitute and gasoline is a com plem ent. rev is ed jrl 08­09­2011 Worksheet Section: Elasticities of Demand and Supply Suppose the annual demand function for the Honda Accord is where PA and PC are the prices of the Accord and the Toyota Camry, respectively (in thousands), and PG is the price of gasoline (per gallon). a. What...
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