A car dealer wants to get rid of the stock of last year’s model. Assum
A car dealer wants to get rid of the stock of last year’s model. Assume that the dealer knows from past experience that the price elasticity of demand for cars is unitary (= 1).
If the price of the cars is currently $20,000 and the dealer wants to increase the quantity demanded from 30 units to 50 units, what must the new price be if the dealer is to sell the 20 additional cars? A) $10,000
B) $12,000
C) $16,000
D) $18,000
ANSWER
B
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