StudentShare solutions

# Cross-price elasticity - Essay Example

## Extract of sampleCross-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...
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.

-Bus in-vehicle time increase of 1% during peak hours causes car demand to increase by 0.4% and bus in-vehicle time increase of 1% during off-peak hours causes car demand to increase by 0.3%.
It is positive, because the consumer is tempted to switch to a car since the bus is slower.
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 conditions for cyclists

-Speaking about cross-price elasticity, bus and bicycle are substitutes theoretically. That's because bus fare rise will entail demand for alternative transport vehicles. But can lots of people change bus trip to bicycle one This effect is possible only after construction of new bike paths to central city areas. After changes in these conditions for cyclists, the demand for bus travel can decrease significantly.
We have another situation with cross-time elasticity. Bicycle is a slower kind of ...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

The Importance of Understanding Price Elasticity
There are various types of price elasticity. The most commonly used and probably the most important for a firm is the price elasticity of demand. Some other types of elasticity include the elasticity of supply, cross-price elasticity of demand and income elasticity.
3 pages (750 words) Essay
Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of
This report is divided into two sections; the first section of the report discusses important terminologies such as Price elasticity of demand, Cross elasticity of demand, Income elasticity of demand and Price elasticity of supply. The other section of the report discusses about the actions that the government can take in order to reduce the fluctuations of commodity prices.
5 pages (1250 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
The elasticity of demand

This paper illustrates that own price elasticity of demand is higher for goods for which consumers have readily available substitutes as in that case in case of very small changes in own prices, ceteris paribus, the substitutes become more attractive. Further, short-term price changes lead to greater sensitivity to demand compared to long-term changes.

4 pages (1500 words) Essay
The Importance of Understanding Price Elasticity
Some other types of elasticity include the elasticity of supply, cross-price elasticity of demand and income elasticity. Price elasticity of demand refers to the percentage change in quantity demanded
3 pages (750 words) Essay
Explain the concept of price elasticity of demand, income elasticity of demand and cross elasticity
The frequent forms of elasticity used by the researchers are price elasticity of demand, income elasticity of demand and the cross price elasticity. The term price elasticity of demand is used to show the
4 pages (1000 words) Essay
Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of supply. (1/3rd of marks: about 500 words plus diagrams) What actions might be taken by countries to reduce or limit price fluc
This report is divided into two sections; the first section of the report discusses important terminologies such as Price elasticity of demand,
5 pages (1250 words) Essay
Distinguish between price elasticity of demand, cross elasticity of demand, income elasticity of demand and price elasticity of supply. (1/3rd of marks: about 500 words plus diagrams) What actions might be taken by countries to reduce or limit price fluc
This report is divided into two sections; the first section of the report discusses important terminologies such as Price elasticity of demand,
5 pages (1250 words) Essay
Price Elasticity
In this case, substitute goods generally refer to a pair of goods in which the consumers consider alternative. On the other hand, complementary goods are those that are used together; one item is usable only when the other item is
1 pages (250 words) Essay
Elasticity
Based on the nature and effect of the factors on quantity demanded elasticity of demand is classified into three types ‘Price Elasticity ’, ‘Income elasticity ’, and
10 pages (2500 words) Essay
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