Suppose that both American and United charge a price of $300 each for a round-trip ticket between Chicago and Dallas. What is the price elasticity of demand for United flights between Chicago and Dallas?
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- According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 194,108 vehicles sold in 2014 to 180,603 in 2015. Over the same period, according to data from the U.S. Energy Information Administration, the average price of regular gasoline fell from $3.36 to $2.43 per gallon. Using the midpoint method, calculate the cross-price elasticity of demand between Toyota Priuses and regular gasoline. According to your estimate of the cross-price elasticity, are the two goods complements or substitutes? Does your answer make sense?Facing keen competition, the University of Montreal (UM) decides to make its program more attractive by promising all undergraduates internship opportunities and job placement services before they graduate. Implementing the new services raises the operating costs and therefore the UM increases its tuition fees by 15%. As a result, student enrollment increases by 25%. Is the price elasticity of demand for UM program elastic, inelastic or indeterminate? Explain your answer.An entrepreneur's most recent venture is selling robots that he builds and programs himself. At a price of $160 each, he sells 660 robots. At a price of $290 each, he sells 340 robots. What is the price elasticity of demand for his robots? Present your elasticity using its absolute value.
- If Congress prohibited the sale of Japanese luxury cars like Lexus, Acura, and Infiniti, how would this affect the price elasticity of demand for Mercedes, BMWs, and Jaguars in the U.S.?You are working trying to estimate the proper price to charge a market for the firm that sells beer in Lancaster Pennsylvania. They estimated that the demand curve for the market is Quantity demanded=20-2P. The firm currently prices the good at 8 dollars. They want to move the price to 6 dollars in a attempt to increase profits. 1) What is the elasticity for this move in price (Use the midpoint method for elasticity) make sure you show your work? 2) Now you are contacted by a different branch of this company that is in a lower priced (Scranton P.A.) market with the same demand curve. They want to move the price from 2 to 5 dollars. What is the elasticity of this change (Use the midpoint method)? 3) Now suppose you find out that there is a similar product that impacts the Quantity demanded for a product. The relationship is Qd=15+Pb. Now suppose the price (Pb) of the other good is 5 and goes to 6. What is the Cross-price elasticity of the good?With higher fuel costs, airlines raised their average fare from $0.75 to $1.25 per passenger kilometer and the number of passenger kilometers decreased from 5 million a day to 3 million a day. What is the price elasticity of demand for air travel over this price range?
- Baylor Lumber sold 10 ft. long corral gates at $299 per gate last month. They sold 20 gates. This month they raised the price to $349 per gate and sales dropped to 12 gates. What is the own-price elasticity of demand for 10 ft. corral gates at Baylor Lumber using the mid-pointformula? What does this say about the demand for corral gates?Assuming a company produces two products - X and Y. The demand for company X's product is given by Qx = 24 – 6Px + 8Py. Suppose product X sells for $6.00 per unit and good Y sells for $3.00 per unit. Calculate the cross-price elasticity of demand between goods X and Y at the given prices. Are goods X and Y substitutes or complements? What is the own price elasticity of demand at these prices? How would your answers to parts (a) and (b) change if the price of X dropped to $5.00 per unit?PRICE (Dollars per room) 500 450 400 350 300 250 200 150 100 50 0 Demand 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hotel rooms) Graph Input Tool Market for Triple Sevens's Hotel Rooms Price (Dollars per room) Quantity Demanded (Hotel rooms per night) Demand Factors Average Income (Thousands of dollars) Airfare from LAX to LAS (Dollars per roundtrip) Room Rate at Exhilaration (Dollars per night) 350 150 50 250 200 For each of the following scenarios, begin by assuming that all demand factors are set to their original values and Triple Sevens is charging $350 per room per night. If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens rooms per night. Therefore, the income elasticity of demand is from rooms per night to , meaning that hotel rooms at the Triple Sevens are If the price of an airline ticket from LAX to LAS were to increase by 20%, from $250 to $300 roundtrip, while all other demand factors…
- Suppose the demand function for flashlights is expressed as Q = 100 - 4p. If a flashlight currently sells for $10, then the point price elasticity of demand equals: -4 -2.5 -0.67 -1.5Diamond Sisters (a monopolist in the sale of diamonds) has decided to increase the price of their industrial-grade diamonds by 10%. You know from past studies that the elasticity of demand for industrial-grade diamonds is -.8. What would you predict would happen to the quantity of industrial-grade diamonds sold, and to the total expenditure on said diamonds?