The Ford Motors Company estimates the elasticity of demand for its new truck as –1.12. Explain why the following statements are either true or false (i.e., state whether true or false and explain why.)
a. “The price effect dominates the quantity effect.”
b. “A 4 percent increase in the number of trucks sold will require a 5 percent decrease in the price of trucks.”
c. “A 5 percent decrease in the price of trucks will increase Ford's total revenue