You have the following information for your product: i. The price elasticity of demand is -0.9. ii. The income elasticity of demand is 0.5. iii. The cross-price elasticity of demand between your good and a related good is 2.0. What can you determine about consumer demand for your product from this information? b) The price elasticity of demand for urban transit fares has been estimated to lie between -0.1 and -0.6. Based on these results, what is the economic argument for raising transit fares? What political arguments might local governments and transit authorities encounter in opposition to these economic arguments?
You have the following information for your product: i. The price elasticity of demand is -0.9. ii. The income elasticity of demand is 0.5. iii. The cross-price elasticity of demand between your good and a related good is 2.0. What can you determine about consumer demand for your product from this information? b) The price elasticity of demand for urban transit fares has been estimated to lie between -0.1 and -0.6. Based on these results, what is the economic argument for raising transit fares? What political arguments might local governments and transit authorities encounter in opposition to these economic arguments?
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter7: Consumer Choice And Elasticity
Section: Chapter Questions
Problem 5CQ: Estimates presented in Exhibit 5 show that Android users have a higher price elasticity of demand...
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Question
You have the following information for your product:
i. The price
ii. The income elasticity of demand is 0.5.
iii. The cross-price elasticity of demand between your good and a related good
is 2.0.
What can you determine about consumer demand for your product from this
information?
b) The price elasticity of demand for urban transit fares has been estimated to lie
between -0.1 and -0.6. Based on these results, what is the economic argument for raising
transit fares? What political arguments might local governments and transit authorities
encounter in opposition to these economic arguments?
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