When the price of gasoline increased from 3 to 4 dollars per gallon, the demand for gasoline decreased from 100,000 gallons to 90,000 daily. Also, the demand for a $50,000 SUV dropped from 3000 to 2500 cars per month. Based on the above please answer the following questions:
1) Estimate the price elasticity of demand for gasoline.
2) Estimate the price elasticity of demand for SUVs.
3) How would you term this demand for gasoline, price elastic, price inelastic, otherwise? Please explain.
4) Estimate the change in the total revenues of gasoline.
5) Estimate the cross elasticity of demand for gasoline and SUVs.
6) Based on the above cross elasticity estimates, please explain whether gasoline and SUVs are complementary, substitute, or not related products.