1. The national gas oil distributor in an attempt to increase revenues and profit, has planned toincrease its price by 4%, of course, the distributor is considering an 11% increase in incomeif the price elasticity of demand is 1.5 and the income elasticity of demand is +0.6A. Would you expect an increase or decrease in quantity demand?B. Which one of the determinate has a strong power to influence the quantity demand ofthe national gas oil distributor? Explain your answer

Price elasticity is elasticity in nature, so with increase in price by 4% , there will be decrease…

A. Would you expect an increase or decrease in quantity demand? B. Which one of the determinate has a strong power to influence the quantity demand of the national gas oil distributor? Explain your answer

A. Would you expect an increase or decrease in quantity demand? B. Which one of the determinate has a strong power to influence the quantity demand of the national gas oil distributor? Explain your answer

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 6PA: The price of coffee rose sharply last month, while the quantity sold remained the same. Five people...

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Question

1. The national gas oil distributor in an attempt to increase revenues and profit, has planned to
increase its price by 4%, of course, the distributor is considering an 11% increase in income
if the price elasticity of demand is 1.5 and the income elasticity of demand is +0.6
A. Would you expect an increase or decrease in quantity demand?
B. Which one of the determinate has a strong power to influence the quantity demand of
the national gas oil distributor? Explain your answer

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