What are the expected signs of the income elasticity of demand for high-speed rail and the cross elasticity of demand between high-speed rail and coaches. How does information on these elasticities help the high-speed rail company in business decisions? Explain. In 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 company hasincreased the ticket prices recently for both seats to cover the higher operational costs. Theprices and quantities sold for both seats before and after the price hike is shown in the tablebelow.Economy SeatsQuantity280Premium SeatsPricePriceQuantity50$200$300$30$4514040

Price elasticity of demand indicates the proportional change in demand due to a proportional change…

Answered: What are the expected signs of the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

What are the expected signs of the income elasticity of demand for high-speed rail and the cross elasticity of demand between high-speed rail and coaches. How does information on these elasticities help the high-speed rail company in business decisions? Explain.

In an economy, long distance travel is usually provided by high-speed rail and coaches. The
fares of high-speed rail are in general higher than the coach fares. Consider a high-speed rail
company that offers two classes of seats in its rides, a small number of premium seats at a
higher price and a large number of economy seats at a relatively lower price. The company has
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 the table
below.
Economy Seats
Quantity
280
Premium Seats
Price
Price
Quantity
50
$200
$300
$30
$45
140
40

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions