6. A recent study determined the following elasticities for Volkswagen Beetles:
Price elasticity of demand = 2
Income elasticity of demand = 1.5
The supply of Beetles is elastic. Based on this information, are the following statements true or false? Explain your reasoning.
A 10% increase in the price of a Beetle will reduce the quantity demanded by 20%.
An increase in consumer income will increase the price and quantity of Beetles sold.