Calculate estimate of price elasticity of demand for economy

Assignment Help Macroeconomics

Reference no: EM13182352

As a national manager for United Airlines you have recently undertaken a survey of the number of passengers per flight on the Boston-New Orleans route that you service. The survey was conducted over five successive months. The data collected included the round-trip fare for an economy-class flight, the average annual per capita income of people who fly the Boston-New Orleans route, and the average passengers per flight on both United and US Air. Assume that all other factors (the price charged by other airlines, the size of planes flown, etc) have remained constant." Month United Price US Air Price Income United Load US Air Load 1 $440 $448 $40,000 130 60 2 $440 $448 $42,000 140 66 3 $436 $444 $38,000 140 61 4 $432 $440 $38,000 136 59 5 $436 $440 $38,000 134 63 a. On the Boston-New Orleans route, calculate an estimate of the price elasticity of demand for United economy seats. Show your work and explain. b. For the same route determine the income elasticity of demand for United economy seats. Show your work and explain. c. Also calculate an estimate of the cross-price elasticity of United flights with respect to US Air flights on the route. Show your work and explain. d. Based on your price elasticity estimate, would United obtain higher total revenue by lowering its price? Explain. e. Based on your elasticity estimates, are United and US Air flights substitutes or complements? Explain. f. Are United's economy seats a normal or inferior good? Explain. g. If consumers had been given more time to adjust to price changes, would you expect the price elasticity of demand to be more inelastic or more elastic? Explain. h. Consider the price elasticity of demand for the category flights on all airlines between Phoenix and Boston. Would that price elasticity be more?

Reference no: EM13182352

Questions Cloud

State why was potassium carbonate used in the distillation : Why was potassium carbonate used in the distillation of 2-methyl-e-hexanol? Use the curved arrow notation to deaw a mechanism to show

Determine the present value of these future savings : A new widget, with a service life of four years, would save $50,000. in production costs each year. Using a 12.00% nominal annual interest rate, determine the highest price that could be justified for the widget, i.e., determine the present valu..

Some of the obstacles that public health officials : What are some of the obstacles that public health officials may encounter in post-conflict disaster settings in Afghanistan? What strategies could be used to address those obstacles?

State why doesnt the formation of the grignard reagent : Why doesnt the formation of the grignard reagent start immediately upon the addition of 1-bromobutane to the magnesium turnings

Calculate estimate of price elasticity of demand for economy : If consumers had been given more time to adjust to price changes, would you expect the price elasticity of demand to be more inelastic or more elastic? Explain. h. Consider the price elasticity of demand for the category flights on all airlines be..

Types of feedback loops the project management team : Propose three (3) types of feedback loops the project management team can implement so that potential users of the new payroll system can provide advice, suggestions, and guidance to the team during project development and implementation.

Define amount of arsenic trichloride and the rest inerts : A 1.784 gram sample containing an unknown amount of arsenic trichloride and the rest inerts was dissolved into a NaHCO3 and HCl aqueous solution.

State the prepeatation and reaction of the grignard reagent : Why was anhydrous, not wet, diethyl either used in the prepeatation and reaction of the Grignard reagent?

Continuous and discontinuos metamorphic reactions : Use examples to distinguish between continuous (sliding) and discontinuos metamorphic reactions, what relevance do these two types of reactions have for the recognition of metamorphic zones?

User Account

All Pages