Question
The demand for bus rides per month is estimated to follow the equation: Q = 9,750 - 500p + 5i + 250Pt wherepis the price
The demand for bus rides per month is estimated to follow the equation:
Q = 9,750 - 500p + 5i + 250Pt
wherepis the price of a bus ride, i is the average consumer income, andPtis the price of a train ride.
Suppose thatp = 1.50,Pt= $400 andi = $3000. What is the cross-price elasticity of demand? Are bus and train rides substitutes or complements?
As in (a), suppose that p = 1.50,Pt= $400 andi = $3000. What is the own price elasticity of demand for bus rides?
Suppose that the price of a train ride falls to Pt =$350. What should be the change in the price of bus rides to guarantee that the demand for bus rides does not change?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Auditing Cases An Active Learning Approach
Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt
2nd Edition
0130674842, 978-0130674845
