Calculate the price elasticity of demand in summer

Assignment Help Econometrics
Reference no: EM13151906

The Tricities Bus Company is a regional bus line providing transit service between Coquitlam, Port Moody and Port Coquitlam. An analysis of the monthly demand for transit reveals the following demand equation:

Qx = 1,750 - 40Px - 15PC + 30BAI - 1,700S

Where Qx is quantity measured by the number of passengers per month, Px is the price, PC is a price index for connecting bus routes, BAI is a business activity index and S, a binary or dummy variable, equals 1 in summer months, zero otherwise.

Currently Px = 50, PC = 120, and BAI = 175.

(a) Calculate the quantity demanded during the winter month of January if all price-related variables are as specified above.

(b) Calculate the price elasticity of demand in winter for transit services and the cross-price elasticity of demand for transit with respect to the level of business activity.

(c) What price would you recommend the Tricities Bus company charge in the winter months if they were primarily interested in maximizing revenue?

(d) Calculate the quantity demanded during the summer month of August if all price-related variables are as specified above.

(e) Calculate the price elasticity of demand in summer for transit services and the cross-price elasticity of demand for transit with respect to the level of business activity.

(f) What price would you recommend the Tricities Bus company charge in the summer months if they were primarily interested in maximizing revenue?

Reference no: EM13151906

Questions Cloud

How do such policies impact product price and industry : How do such policies impact product price and industry output and employment? Are these kinds of policies easy to implement in practice? How has globalization of production affected our ability to control pollution?
Which mutual fund to choose to invest the money : You can invest the money in one of two mutual funds with similar yearly average returns (9.8% vs. 9.9%). Which mutual fund would you choose?
How many molecules of co are present : the concentration of carbon monoxide in a sample of air is 9.2 ppm. there are how many molecules of CO are in 1 liter of 755 torr and 23 degrees celcius
Ideal system of internal controls : Management is often unwilling to implement an ideal system of internal controls because
Calculate the price elasticity of demand in summer : Calculate the price elasticity of demand in summer for transit services and the cross-price elasticity of demand for transit with respect to the level of business activity.
How important is the existence of a significant barrier : How important is the existence of a significant barrier to entry to maintaining a monopoly? What would be the result if a monopoly market could be easily entered?
Companies refused to follow the increase : When other companies refused to follow the increase, American Airlines made an attempt to gain customers in the competitors' markets by applying aggressive discounts on the tariffs.
Muriel taxable income problem : Muriel, age 70 and single, is claimed as a dependent on her daughter's tax return. During 2009, she had interest income of $2,400 and $800 of earned income from babysitting. Muriel's taxable income is what?
Explain claims that result is not surprising : When the results are collected, two of the students discover that their condence intervals dont even overlap. A student in the course who is also taking Stat 311 claims that this result is not surprising. Do you agree?

Reviews

Write a Review

 

Econometrics Questions & Answers

  Determination for a regression relationship

The coefficient of determination for a regression relationship defined through Y = a + bX is 81 percent.

  Computing regression lines and coefficient of squares

Computing regression lines, coefficient of squares, graphing dependent and independent variables using square footage vs home sales.

  Determining equilibrium price and quantity

Compared to last year, more television sets are being bought while the selling price has fallen. This could have caused by:

  Estimate the compound growth rates

The sales information for the Lonestar Sports Apparel Corporation for the last 12 years as follows:

  Calculate monthly returns and average monthly returns

Choose two firms from different industrial sectors, e.g. high tech computers, health, customer non durables, cyclical etc.

  Evaluating the results of regression

Gold Trackers watching the value of precious metals and has daily information on prices and sales of gold for the last many years.

  Calculate the regression

In Milky Way Galaxy, a class of 2,000 students took a course in Astronomy. The 1st exam scores and final exam percentage reached earth, but transmission broke off after only a dozen students' scores were received.

  Question about high unemployment rate

Despite very low growth of GDP in 2008 and 2009, and still high unemployment rate of 9.5 percent in June 2010.

  Multiple choice - economics and management review

Determine when the exponents of a Cobb-Douglas production function sum to more than one, the function exhibits

  Consumer price index calculation

The agency of Labor Statistics follows 5-steps to calculate Consumer Price Index. Determine three strengths and three weaknesses of the Consumer Price Index calculation.

  Salary of manager in competing firms

You are attending the yearly shareholder's meeting of PIC firm. A fellow stockholder points out that manager of PIC received $100,000 last year, while the manager of a rival company, CUP Enterprises, earned only $50,000.

  What is the sample standard deviation of weights

What is the sample standard deviation of weights and calculate the change in weight

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd