In this problem, demonstrate your knowledge of percentage rates of change of an entire demand function (HINT: %DQ = EP · %DP + EY · %DY). You have found that the price elasticity of motor control devices at Allen-Bradley Corporation is -2, and that the income elasticity is a +1.5. You have been asked to predict sales of these devices for one year into the future. Economists from the Conference Board predict that income will be rising 3% over the next year, and AB's management is planning to raise prices 2%. You expect that the number of AB motor control devices sold in one year will:
fall .5%.
not change.
rise 1%.
rise 2%.
rise .5%.