Question 1. [10 points] Examine whether the following statement is true or false. Explain. The own price elasticity of demand is constant if the slope of a downward sloping demand curve is constant. Question 2. [10 points] If the price of a minivan is $40,000, find the price and quantity of a passenger car that maximizes revenue when the demand for a passenger car is characterized by the following equation Qd = 20000 – 4P1 + 2P2where Qd represents number of passenger cars demanded; P1 represesents the price of a passenger car; and P2 represents the price of a minivan.
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