Calculate the price elasticity of demand for both economy and premium seats using the mid-point method and classify the two seats based on the price elasticity of demand. Question 1In an economy, long distance travel is usually provided by high-speed rail and coaches. Thefares of high-speed rail are in general higher than the coach fares. Consider a high-speed railcompany that offers two classes of seats in its rides, a small number of premium seats at ahigher price and a large number of economy seats at a relatively lower price. The companyhas increased the ticket prices recently for both seats to cover the higher operational costs.The prices and quantities sold for both seats before and after the price hike is shown in thetable below.Economy SeatsPremium SeatsPriceQuantityPriceQuantity$30280$20050$45140$30040(a) Calculate the price elasticity of demand for both seats using the mid-point method andclassify the two seats based on the price elasticity of demand.

Price elasticity of demand: - Price elasticity of demand measures the responsiveness of change in…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Demand for boxes of pomegranate is given by p=12-0.0025Q Calculate the price elasticity of demand between 9.75 and 9.60 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Suppose you did an analysis regarding the sensitivity of tea to the price of tea. You estimated the price elasticity of demand to equal 0.5. Explain this finding
A price elasticity of -1.5 means that we expect (approximately) the percentage change in quantity demanded to be 1.5 times the percentage change in price. Minus sign means when price goes up, quantity demanded goes down and vice versa. true/false
If the price of a good decreases from $6.50 to $5.75 and, as a result, the quantity demanded increases from 500 to 700. Using the midpoint method, the price elasticity of demand is
Given the table of elasticity estimates and price increases, calculate the percentage decrease in unit sales and then predict if total revenue should increase or decrease based on your calculations. Instructions: Enter your responses as a percentage rounded to one decimal place if necessary. Do not include a negative sign (-) with your answers. Degree of Elasticity Relatively elastic (E > 1) Airline travel, long run Unitary elastic (E = 1) Shoes Relatively inelastic (E< 1) Coffee v Estimate V 2.4 0.9 0.3 Decrease in Quantity Demanded Increase in Price (%) (%, do not include a negative sign) 20% 20% 20% Given the increase in price and your calculated percentage change in quantity demanded, what is the predicted impact on total revenue in each market? Airline Travel: total revenue will slightly decrease ✓ Shoes: total revenue will decrease Coffee: total revenue will decrease 21.6% 90.0% 81.0%
The price elasticity of supply is a measure of the: Responsiveness of buyers of a good to changes in its price Effect of changes in supply on the price Responsiveness of sellers of a good to changes in its price Relationship between price and profitability Sensitivity of a good's price to changes in supply
If the quantity sold of a product rose from 4 units to 10 units as a result of a price decrease from $12 to $10 then the elasticity coefficient is:
Part D As part of Government's IDIF initiative, a small technology company in the Eastern Region is developing laptop computers as substitutes to those imported from abroad. Based on market surveys, the company believes the quantity Q (in thousands of units) that will be demanded by consumers is related to the price P (in thousands of cedis) by the relationship Q= 48 – 2P', P>0. a. Find the price elasticity of demand when the price of the laptop is GHC 3,000. b. Determine where the demand is elastic, inelastic, and of unit elasticity with respect to price. c. Interpret the results of part (b) in terms of the behaviour of total revenue as a function of price.
The price elasticity of demand for product A is 0.5, and the percentage change in quantity demanded is 1.2. What is the percentage change in price? Round up your answer to 1 (one) decimal place e.g 2.28 = 2.3; Do not include the % sign)
The price elasticity of demand for a product is 0.51. A percentage change in price is 17%. The initial quantity of the product is 190 units. Calculate the new quantity of the product, and use the midpoint method
The underground fare in your town has just been increased from a current level of $1.00 to $1.20 per ride. As a result, a 10 per cent decline in the number of passengers was noticed. a) Compute the price elasticity of demand for underground rides. Answer (enter a numerical value): b) Would you expect an increase or a decrease in revenues resulting from this price change? Answer (select): c) If the fare was reduced back to $1.00, what impact would you expect on the number of passengers? Answer (select):
If the price of a good is decreased and total revenue received from the sale of this good does not change, then the price elasticity of demand for the good is Group of answer choices: inelastic. None of the above elastic. unitary.

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