Supplementary Questions 1. You are the CEO of a bus company. Now the company is charging $5 per trips for everyone who takes the bus. You want to increase the total revenue of the bus company. Use the demand schedules below to answer the following questions. 10 I Price Adult Demand 10 20 30 40 50 60 70 80 90 100 Quantity 10 I Price Child Demand Quantity a. What is total revenue for Adult group? What is total revenue for child group? b. Which group has a more elastic demand for bus service? C. Which market has the more inelastic demand? d. What is the elasticity of demand between the prices of $5 and $2 in the adult market? Is this elastic or inelastic? e. What is the elasticity of demand between $5 and $2 in the children's market? Is this elastic or inelastic? f. Given the graphs and what your understanding about economics, should the bus company increase the price of adult tickets to $8 each and lower the price of a child's ticket to $3. How much could you increase total revenue if you take action? 3 BUS10407 Economics I Tutorial Supplementary Questions (Student) 2. Business travel exhibits inelastic demand while vacation travel demonstrates elastic demand. Suppose the government reduce the tax on airlines results in double the supply of both services (i.e. the quantity supplied at each price is twice what it was). a. What happens to the equilibrium price and quantity in each market? b. Which market shows a larger change in price? c. Which market have a larger change in quantity? d. What happens to total consumer spending on each market