SA1. Using the concept of elasticity, explain why airlines have imposed fees on things such as checked bags?

Suppose AAA Airlines is suffering from low revenues and profits. If the company wants to increase ticket revenue and the price elasticity of demand is 0.75, describe what the company should do and why:

According to data from the U.S. Department of Energy, sales of the fuel-efficient Toyota Prius hybrid fell from 158, 574 vehicles sold in 2008 to 139,682 in 2009. During the same time, according to data from the U.S. Energy Information Administration, the average price of regular gasoline fell from $3.27 to $2.35 per gallon. -CGQ4. Based on the information provided above, compute the cross-price elasticity of demand between the Toyota Pri (Prius) and regular gasoline. Based on your computation, are the two goods complements or substitutes?

-CGQ5. Compute the price elasticity of supply for web design services when the price per hour rises from $100 to $150 and the number of hours transacted increases from 300,000 to 500,000. Is supply elastic, inelastic, or unit-elastic?

-CGQ9. nI Figure 5.7, given an income of $30 and a price for good Yof $1, which of the following two points represents optimal consumption? Awhen price of Xis $3 and Cwhen price of Xis $1. Bwhen price of Xis $1 and Dwhen price of Xis $3. C. Awhen price of Xis $1 and Dwhen price of Xis D. BwhenpriceofXis$1andCwhenpriceof Xis$3 -CGQ10. To increase municipal tax revenue, the regional municipal authority has agreed to impose a $1 tax on gasoline. Compute the taxation burden of consumers and producers of this new taxation policy, assuming the consumer's price elasticity is 0.78 and the municipality's price elasticity of supply is 1.23.

In the United States, 2007 was a bad year for growing wheat. And as wheat supply decreased, the price of what rose dramatically, leading to a lower quantity demanded. The table below describes what happened to prices and the quantity of wheat demanded: 2006 2007 Quantity demanded (bushels) 2.2 billion 2 billion Average Price (per bushel) $3.42 $4.26 CGQ1. Using the midpoint method compute the price elasticity of demand for winter wheat. CGQ2. Compute the total revenue for U.S. wheat farmers in 2006 and 20077 CGQ3. Did the bad harvest increase or decrease the total revenue of U.S. wheat farmers? How could you have predicted this from your answer to question CGQ17? Computational and graphical questions T-shirts demanded T-shirts demanded at average tourist income of at average tourist income of Price of T-shirt $20000 $30000 $4 3000 5000 $5 2400 4200 $6 1600 3000 $7 800 1800 CGQ6. Using the above data, compute the income inelasticity of demand when the price of a T- shirt is $4 and the average tourist income increases from $20,000 to $30,000. CGQ7. illustrate and compute the percentage change in the price of Product Z assuming demand for this product increased by 5.65%; given the price elasticity of demand for this product is .45 and the price elasticity of supply is 0.86.Use the indifference curves and the budget lines in Figure 5.7 to answer the indicated questions. Assume the price of Y is $1 per unit. Figure 5.7 Quantity of Good TG 20 30 Quantity of Good .Y Computational and graphical questions - 35 >GQ8. Refer to Figure 5.7. If the price per unit of good X is $3, the consumer would maximize utility at which point and why? Quantity of hours worked Total Benefit Total Cost 0 $0 30 1 30 10 2 55 21 3 75 34 4 90 50 5 100 70 CGQ11. Using the above table and marginal analysis determine the optimal number of hours that should be worked