img' (a If po increases, what happens to the demand and supply of public transportation (shifts left/shifts right/doesn’t change) What happens to the equilibrium quantity and price for public transportation? (increase/decrease) (b)At a given price p, as oil becomes more expensive (po increases), does the (own) price elasticity of demand for public transportation increase / decrease / stay the same? (c) Calculate the cross-price elasticity of public transportation demand with respect to the oil price po, at the point p = 1 and po = 2. Are the two goods (public transportation and oil) substitutes
img' (a If po increases, what happens to the demand and supply of public transportation (shifts left/shifts right/doesn’t change) What happens to the equilibrium quantity and price for public transportation? (increase/decrease) (b)At a given price p, as oil becomes more expensive (po increases), does the (own) price elasticity of demand for public transportation increase / decrease / stay the same? (c) Calculate the cross-price elasticity of public transportation demand with respect to the oil price po, at the point p = 1 and po = 2. Are the two goods (public transportation and oil) substitutes
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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img'
(a If po increases, what happens to the demand and supply of public transportation (shifts left/shifts right/doesn’t change) What happens to the
(b)At a given price p, as oil becomes more expensive (po increases), does the (own) price elasticity of demand for public transportation increase / decrease / stay the same?
(c) Calculate the cross-price elasticity of public transportation demand with respect to the oil price po, at the point p = 1 and po = 2. Are the two goods (public transportation and oil) substitutes or complements, or unrelated?
Transcribed Image Text:PROBLEM (1)
The demand for public transportation is given by Qº
= " where p is the price of public
transportation and po is the price of oil. On the other hand, the price of oil also affects the supply of public
transportation, given by QS
(po)3
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