Question
The table gives estimates of the ownprice and crossprice elasticities of demand for bus and rail travel. Elasticity with respect to the price of Bus
The table gives estimates of the ownprice and crossprice elasticities of demand for bus and rail travel.
Elasticity with respect to the price of
Bus Travel Rail Travel
Good
Bus travel -0.37 +0.13
Rail travel +0.16 -0.43
Other things being equal, what would be the change in the volume of rail travel resulting from a 1% increase in bus fares?
(a) An increase of 0.16%
(b) An increase of 0.43%
(c) An decrease of 0.13%
(d) An decrease of 0.37%
I'm not sure how to read the table. And do I have to use the cross elasticity of demand formula for this question?
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