If the demand for automobiles is elastic, higher prices for safety should reduce total dollar sales.

Question

Quizplus · Accepted Answer

If demand for automobiles is elastic, it means that a change in price will result in a proportional change in quantity demanded. This means that if the price of automobiles increases, the total dollar sales will decrease because consumers will buy fewer cars at the higher price. Therefore, if higher prices are charged for safety features, which increases the overall price of the car, it is likely that the demand for the car will decrease even further, resulting in a reduction in total dollar sales.

If the Demand for Automobiles Is Elastic, Higher Prices for Safety