Economics 9708 · AS & A Level · Price elasticity of demand

Price elasticity of demand — practice question

The table presents data for the market for two car models. model 1200 cc: weekly number of cars sold 10 000, cross elasticity of demand with respect to the price of petrol -0.25; model 2000 cc: weekly number of cars sold 5 000, cross elasticity -0.50. If the car prices stay the same, but the price of petrol rises by 100%, what effect will this have on the weekly number of cars sold?

  • Aincrease by 5000
  • Bno change
  • Cdecrease by 5000
  • Ddecrease by 15 000

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