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1) Assume that the income elasticity of demand for tickets is +2.5. Also assume that the average household in the community makes $20,000 per year and that about 6000 tickets are sold per year. Now let the average household income go up to about $22,000 per year. Now how many tickets do you expect to be sold in a year?
2) In addition to basketball games, there is also the possibility of attending ice hockey games, for which tickets are $8.00. Assuming cross-price elasticity (percentage change in demand for basketball tickets per percentage change in hockey ticket prices) of +1.5, what will happen to attendance at basketball games if hockey tickets rise to $10.00 per ticket? By how much will there be the rise/fall in attendance at basketball games? Are hockey games a substitute for basketball games or a complement? Why?
A $2 million School-bond issue being interest at 15 percent pay le annually and maturing in 25 year was sold at a price which a 20 percent annual rate of return to the investors. The brokerage fee for handling the sale was 0.3 percent of the bond iss..
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What are the short-run equilibrium values of the price level, expected price level, output, and unemployment rate. Illustrate what are the values of cyclical unemployment and unanticipated inflation.
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