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Elasticity of demand for gasoline and public transport
1. A. Current gas is $1.50 a gallon, avg household income is $100,000 a yr. The quantity demanded is 200 million gallons of gas a week. If gas were to increase to $1.68 a gallon the quantity demanded would fall to 158.7 million gallons a week. If household income increased to $110,500 a yr , the quantity demanded would rise to 208 million gallons a week. Find the income elasticity of demand. Explain whether gas is a normal or inferior product.
B. In 2003 the NY MTA increased subway fares 33%. Ridership before fare change was 1million. Ridership fell 1% (from 1million to 991,000), but discount ridership increased from 25% to 32%. Assume the avg discount far was increased by 10%.(250,000 to 317,120) Without the discount increase, discount ridership would have went up from 250,000 to 350,000. Assume the cross-price elasticity of demand for discount rides with respect to regular fares be X. Isolate the change is discount ridership due to the change in regular fares as part of your calculation of X.
Suppose you decide to withdraw $100 in currency from your checking account. What is the effect on M1? Ignore any actions the bank might take as a result of the withdrawal.
Illustrate the price elasticity of demand at the equilibrium price and quantity.What is the price elasticity of supply at the equilibrium price and quantity.
During the period of airline regulation, the government set airline fares and regulated an air carrier's entry into and exit from particular markets.
Discuss the impact on wages, employment in the industry, and the economic welfare of the following input market structures. In which case will the deadweight loss be the smallest?
Assume that the graph on the next page illustrates the marginal, average variable and average total cost curves of a typical coffee grower-Assume that the current market price at the wholesale level is $5 per pound. How much coffee will this typica..
What is her marginal rate of substitution when L = 100 and she is on the budget line? What is her reservation wage? What is her optimal combination of C and L?
What is real mortgage interest rate in 2001, 2002, 2003 and 2004? What are the values in 2000 dollars of the Nancy's monthly mortgage payments in the year of 2001, 2002, 2003, and 2004?
Life insurance companies require applicants to submit to a physical examination as proof of insurability prior to issuing standard life insurance policies.
Suppose the marginal expense of hiring another worker is $150 and the marginal expense of hiring current workers for an extra hour is $10.
How large is the desired fiscal stimulus. Explain by how much do income taxes have to be raised to get that restraint.
Is it possible that the levels of unemployment present day which are the result of government policies.
Taxi fares in New York recently were increased by nearly 50%. Predict the effect on the price of taxicab medallions, the earnings of taxicab drivers and congestion in New York streets.
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