question archive A recent study determined the following elasticities for Picanto: Price elasticity of demand = 3 Income elasticity of demand = 2
Subject:EconomicsPrice: Bought3
A recent study determined the following elasticities for Picanto:
Price elasticity of demand = 3
Income elasticity of demand = 2.5
The supply of Picanto is elastic. Based on this information, are the following statements true or false? Explain your reasoning.
A 10% increase in the price of a Picanto will reduce the quantity demanded by 30%.
An increase in consumer income will increase the price and quantity of Picantos sold.