Posted: October 5th, 2016

Auto dealers slash prices at the end of the model year in response to deficient demand/excess inventory but restaurants facing the same problem slash production because

Auto dealers slash prices at the end of the model year in response to deficient demand/excess inventory but restaurants facing the same problem slash production because Answer auto customers are less price sensitive than restaurant customers price elasticity of demand (in absolute values) is higher for auto than restaurant customers price elasticity of supply is lower in auto than in restaurants restaurant food spoils quickly and is much more perishable price elasticity of supply in autos is smaller than the absolute value of price elasticity of demand but the reverse is true for restaurants

Source: http://www.homeworkminutes.com/question/view/47619/ECO-550ECO-550-Midterm
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