Chapter 19, Problem 2P

Table 19-2 indicates that the short-run price elasticity of demand for tires is 0.9. If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $50 to $60, by what percentage would you expect the quantity of tires demanded to change?

	Estimated Elasticity
Category	Short run	Long run
Air travel (business)	0.4	1.2
Air travel (vacation)	1.1	2.7
Beef	0.6	N.A
Cheese	0.3	N.A
Electricity	0.1	1.7
Fresh tomatoes	4.6	N.A
Gasoline	0.2	0.5
Hospital services	0.1	0.7
Intercity bus services	0.6	2.2
Physician services	0.1	0.6
Private education	1.1	1.9
Restaurant meals	2.3	N.A
Tires	0.9	1.2

Table 19-2