A recent study determined the following elasticities for Volkswagen Beetles:Price elasticity of demand = 2Income elasticity of demand = 1.5The supply of Beetles is elastic. Based on this information, are the following statements true or false? Explain your reasoning. a. A 10% increase in the price of a Beetle will reduce the quantity demanded by 20%.b. An increase in consumer income will increase the price and quantity of Beetles sold. Since price elasticity of demand is greater than 1, total revenue will go down.

A) TRUE

As the price elasticity of the demand is 2 this means that for every percentage increased in pric, the consumers will drop their demand 2% twice as much.

B) TRUE

The supply is elastic threfore it can respond to increase in demand with more production (if it wasn't inelastic it wouldn't)

C) TRUE

As the decrease is quantity is more than proportional of the increase in price an increase in price reduces the total revenue.

Explanation:

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

years agooo ahaha. but honestly they need to update ! : )