Cross-price elasticity - Essay Example

Only on StudentShare

Extract of sample
Cross-price elasticity

Similarly if the two goods are complements, we should see a price rise in one good cause the demand for both goods to fall.
-Cross-price elasticity of demand (CPEoD) for car travel with respect to bus fares is very low and is equal to 0.01>0, but 0.010 so there is no relationship between them. It's clear. If the car travel cost grows, the bus fare will grow too. That's why there will not be the greater demand for this kind of transport.
c) How would you interpret the cross-time elasticity of demand for car travel with respect to bus in-vehicle travel, why is it positive, and why is the elasticity higher for peak times compared to off-peak times Does it surprise you that the responsiveness of the demand for car travel is greater with respect to bus in-vehicle time than to bus fares Explain your answer.
The elasticity is higher for peak times compared to off-peak times, because during the peak hours the busses move slower than during off-peak hours and the consumer is keener to switch to a car when the bus is moving slower than when it is moving faster.
d) Are bicycle and bus travel likely to be substitutes or complements What would be the effect on demand for urban bus travel of construction of new bike paths to central city areas What elasticity measures might be relevant when trying to measure the responsiveness of demand for bus travel to changes in these ...Show more

Summary

- With respect to bus in-vehicle times: 0.30 (off-peak) and 0.40(peak). This refers to the time spent on the actual bus trip. As it says in the question, "the cross-time elasticities of demand for car travel" That is, the demand for car travel in response to changes in the amount of time spent on the bus trip.
Author : tylergerlach
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Cross-price elasticity"
with a personal 20% discount.
Grab the best paper

Related Essays

Petroleum Pricing
As the petroleum prices increase, we have seen a major trend that people are shifting towards alternative forms of fueling resources. Countries at the international and the domestic front all are trying fuels such as bio-fuels and compressed natural gas (CNG) without any hesitation has gained popularity amongst the passes.
4 pages (1000 words) Essay
Elasticity of Demand Essay
(Alfred Marshall, Principle of Economics(1890)) In the words of Paul A. Samuelson, "price elasticity of demand indicates the responsiveness of quantity demanded to the changes in market price." (Anthony Samuelson, Foundations of Economic Analysis, 1947).
7 pages (1750 words) Essay
Oil price reaches record high of $100 barrel
Then the basis of pricing in each market is discussed. The demand-supply gap is then discussed. In a sellers market, pricing of oil is done through three main aspects viz- Value of equivalent human energy, Sustainable energy creation costs, Affordability of the least rich marginal consumer.
4 pages (1000 words) Essay
Elasticity of Demand
When we talk of product price, we mean market price. That is the price at which the product is sold to all buyers in the market. The quantity of a product that we purchase at a certain price is called the demand of the product. Price of a product and its quantity demanded are closely related in the sense that each of these has a bearing on another.
10 pages (2500 words) Essay
Practice Problems for Elasticity
Price elasticity is always positive for two substitutes. Third, complement, cross-price elasticity f demand is calculated as the percent change in demand divided by the percent change in price. A change in price f a complement will determine the magnitude f the shift in the demand curve.
10 pages (2500 words) Essay
Chinese Medecine
The people in the 8000 year old era were aware of the meditation and they would observe the flow of energy in and out of the body. These people would analyze and understand the interaction of the man with nature and the whole universe. Fu His was one of sage during this time who came up with the concept of Yin and Yang which is the considered as the fundamental of the Chinese medicine.
10 pages (2500 words) Essay
Managerail Economics
The competitive market yields a total surplus equals to A & B in Figure 1. The above equlibrium level only yields C&D because in that case price is too low so suppliers will only supply until Q1. The below-equilibrium level of output is associated with a very high price, therefore as shown in Figure 3 consumers will only demand up to Q2 and yields total surplus equals to E&F.
3 pages (750 words) Research Paper
TRANSFER STUDENTS
In addition, there is also the assistance of the faculty members who are well versed in their field of expertise which is essential for the teaching and training of
1 pages (250 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT