QUESTION 17 Assume that the demand for a service depends on price and income, where the price elasticity of demand is PE = -0.6 and the income elasticity is EY = 1.8. If price decreases by 4% and revenue increases by 2%, the quantity service demanded: Or will decrease by 2.4% Or will increase by 4.8% Ⓒ will increase by 6% will decrease by 9.6% will not be affected since the change in price will cancel out the change in income.

QUESTION 17 Assume that the demand for a service depends on price and income, where the price elasticity of demand is PE = -0.6 and the income elasticity is EY = 1.8. If price decreases by 4% and revenue increases by 2%, the quantity service demanded: Or will decrease by 2.4% Or will increase by 4.8% Ⓒ will increase by 6% will decrease by 9.6% will not be affected since the change in price will cancel out the change in income.

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 10PA

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