Find out the income elasticity of demand

Assignment Help Macroeconomics
Reference no: EM1328146

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.

Reference no: EM1328146

Questions Cloud

Ethical considerations for employee handbook : What are some ethical considerations involved in the design of an employee handbook?
Cincinnatti software and scheduling technique : Cincinnatti Software: Scheduling Technique - If you were the project manager, which method would you use, and why?
Communication is fundamental in improvement process : Reinforce organization's vision and mission and link specific goals and objectives to the mission. Communication is fundamental in any improvement process.
Suppose that even parity is used for rows : many techniques (typically referred to as forward error correction) can be used to add redundant bits to a message in order to help a receiver right bits that have been damaged in transmission.
Find out the income elasticity of demand : Find out the income elasticity of demand. Elucidate whether gas is a normal or inferior product.
Manage customer-centric innovation—systematically : Selden and McMillan, in "Manage Customer-Centric Innovation—Systematically," contend that customer-centric innovation will better sustain a company.
What additional solutions do you propose : Evaluate the alternative solutions being considered by Jennifer Roberts and What additional solutions do you propose? Why?
Calculate prevent value-discount rate-effective rate : Bausch & Lambe LLC. is negotiating a loan from HSBC. The small chemical company needs to borrow $600,000. Which loan carries the lower effective rate? Consider fees to be the equivalent of other interest.
Explain key factors for successful e-business website : Explain Key factors for successful e-Business website and explain why the design factors you chose are important to success

Reviews

Write a Review

Macroeconomics Questions & Answers

  Ixed manufacturing support costs for the present year

Manufacturing support also selling as well as administrative costs comprise both variable and fixed costs; fixed manufacturing support costs for the present year

  Skills are required for current future employees to possess

skills are required for current also future employees to possess for the organization to be successful

  Human service interactions in terms of macro systems

Human service interactions in terms of macro systems-communities and organizations. Empowerment is basically a process to assist people groups, families and communities, individuals, to use their strengths to overcome their challenges.

  Daily budget constraint and calculating reservations wage

Shelly's preferences for consumption and leisure can be expressed as. This utility function implies that shelly's marginal utility of leisure is C-200 and her marginal utility of consumption is L-80.

  Computing the changes in quantity

Suppose the firm raised the price to $4.00 while increasing its advertising expenditure by $100. Would this be beneficial? Explain. Illustrate your answer with the use of a demand schedule and a demand curve.

  Describe the point price elasticity of demand

Describe the point price elasticity of demand. What is the new point price elasticity if price is raised.

  Computation of markup price

The California Instruments Corporation, a producer of electronic equipment, makes pocket calculators in a plant that is run autonomously. What price should the manager charge for the calculators?

  Specialization and gains from trade

Robin and Terry are Stranded on a deserted island and consume two products, coconuts and fish. In a day, Robin can catch 2 fishes or gather 8 coconuts, and Terry can catch 1 fish or gather 1 coconut.

  Problems which increase insured people

Suppose that in response to learning that some sick individuals were denied health insurance, the government mandates that insurance companies must offer insurance to everyone at unregulated rates.

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Changes in equilibrium real output and price level

Explain how each of the following scenarios would cause the aggregate demand, short-run aggregate supply, and/or long-run aggregate supply.

  Pricing and output of monopolies

As the manager of monopoly, you face potential government regulation. Findout the monopoly price and output.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd