Table 19-2 indicates that the short-run price elasticity of demand for tires is 0.9. If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $50 to $60, by what percentage would you expect the quanity of tires demanded to change? TABLE 19-2Price Elasticities of Demandfor Selected GoodsEstimated ElasticityHere are estimated demand elasticities forCategoryShort RunLong Runselected goods. All of them are negative,although we omit the minus sign. Estimatesof both short-run and long-run price elas-ticities of demand are given where avail-able. The long run is associated with thetime necessary for consumers to adjust fullyto any given price change. (Note: “N.A."indicates that no estimate is available.)Air travel (business)0.41.2Air travel (vacation)1.12.7Вeef0.6N.A.Cheese0.3N.A.Electricity0.11.7Fresh tomatoes4.6N.A.Gasoline0.20.5Hospital services0.10.7Intercity bus service0.62.2Physician services0.10.6Private education1.11.9Restaurant meals2.3N.A.Tires0.91.2

Price elasticity of demand is an estimation of the adjustment of utilization of an item according to…

Answered: able 19-2 indicates that the short-run…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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Table 19-2 indicates that the short-run price elasticity of demand for tires is 0.9. If an increase in the price of petroleum (used in producing tires) causes the market prices of tires to rise from $50 to $60, by what percentage would you expect the quanity of tires demanded to change?

TABLE 19-2
Price Elasticities of Demand
for Selected Goods
Estimated Elasticity
Here are estimated demand elasticities for
Category
Short Run
Long Run
selected goods. All of them are negative,
although we omit the minus sign. Estimates
of both short-run and long-run price elas-
ticities of demand are given where avail-
able. The long run is associated with the
time necessary for consumers to adjust fully
to any given price change. (Note: “N.A."
indicates that no estimate is available.)
Air travel (business)
0.4
1.2
Air travel (vacation)
1.1
2.7
Вeef
0.6
N.A.
Cheese
0.3
N.A.
Electricity
0.1
1.7
Fresh tomatoes
4.6
N.A.
Gasoline
0.2
0.5
Hospital services
0.1
0.7
Intercity bus service
0.6
2.2
Physician services
0.1
0.6
Private education
1.1
1.9
Restaurant meals
2.3
N.A.
Tires
0.9
1.2

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