[Solution] Between 2009 and 2010, the quantity of cars produced and sold decreased by 20%. During the same period, the price of cars increased by 5% and
Question:
Between 2009 and 2010, the quantity of cars produced and sold decreased by 20%. During the same period, the price of cars increased by 5% and the cost of gasoline increased by 20%. We know that the cross elasticity of demand of gasoline is -0.3.
- Compute the impact of the gasoline price increase on the demand for cars (10 points)
- Compute the price elasticity of demand for cars during this period (10 points)
Deliverable: Word Document 
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