User Account

All Pages

Concepts of price elasticities of transport demand

Assignment Help Microeconomics
Reference no: EM13700234

According to an article entitled "Concepts of Price elasticities of Transport Demand and Recent Empirical Estimates," Journal of Transport Economics, the estimates of the price elasticity of demand for selected modes of transportation is as follows:

Category: Estimated Elasticity:
Airline travel, Leisure -1.52
Airline travel, Business -1.15

Suppose an airline company wants to use third-degree price discrimination to maximize its profits, by setting the price of a business travel ticket to P(b), and the price of a vacation (leisure) travel ticket to P(v). Also suppose the airline faces the same marginal cost of $30 for both types of travelers.


1. Explain third-degree price discrimination?


2. What should be the ratio of P(b) and P(v), that is P(b)/P(v)? Show Work.


3. Which type of customers should the airline company charge a higher price, and why?

Reference no: EM13700234

Questions Cloud

The arguments for restricting trade : The arguments for restricting trade- The president of the United States explains that it is necessary to impose trade restrictions, such as a tariff, on the steel-rod industry to protect workers in the domestic steel-rod industry. The president claim..
Most likely to experience expenditure offsets : Which of the following transfers is most likely to experience expenditure offsets? Explain.
An example of an automatic stabilize : For each of the following, explain whether it is an example of an automatic stabilizer: a. unemployment benefits increase during a recession
Determine which option consumer-interest rate : A consumer receives income y in the current period, income y in the future period, and pays taxes t and t' in the current and future periods, respectively. The consumer can lend at real interest rate r. the consumer is given two options. First, he or..
Concepts of price elasticities of transport demand : According to an article entitled "Concepts of Price elasticities of Transport Demand and Recent Empirical Estimates," Journal of Transport Economics, the estimates of the price elasticity of demand for selected modes of transportation is as fol..
Software applications for the administration : Software applications for the administration, documentation, tracking, and reporting of training programs, classroom and online events, e-learning programs and training content best describes Choose one answer.  a. visual performance systems. b...
Sears marketing strategy : Sears' marketing strategy is best described as a Choose one answer. a. brick-and-mortar strategy. b. shared service mall strategy. c. click-and-mortar strategy. d. direct marketing from a manufacturer strategy.
What is the structural unemployment : As businesses are downsizing in the recession, they are laying off a lot of people. What type of unemployment will then occur? What is the NRU?. What is the Structural Unemployment? If you are structurally unemployed, do you expect your jobs will com..
Expenditures compared to the option of raising prices : What do you believe are the opportunity costs of reducing expenditures compared to the option of raising prices?

Reviews

Write a Review

Microeconomics Questions & Answers

  Economists often study and evaluate economic policies

Economists often study and evaluate economic policies by country or region. As an economist, evaluate different regional trading arrangements. Select one regional trading arrangement and describe three economic effects of the arrangement. Plea..

  If government did perform expansionary fiscal policy to

suppose for a closed economy no import or export the autonomous consumption ac 500 mpc0.9 and suppose that the

  What agreements are integral parts of the wto

What agreements are integral parts of the WTO and what issues do these address?

  1 for each of the determinants of demand in equation 21

1. for each of the determinants of demand in equation 2.1 identify an example illustrating the effect on the demand for

  Find the cournot solution algebraically

The equation QA= 1/2(12-Q)b) is the so called reation function of duopolist A in a COurnot model becasue given the value of Qb, Qa gives the best or profit-maximizing level of sales of oligopolist A. Show that this is the case with reference. Wha..

  Pick a recently released good or service

Using the same product example above, analyzing how the risk tolerance factors play in supplying the good or service and how this should influence management's decisions.

  What should be included in learning and growth perspective

If Appe were to build a balanced, scorecard, what two objectives do you think should be included in the learning and growth perspective?

  Investigations of antitrust behavior

The Microsoft antitrust trial (United States vs. Microsoft) has been one of the biggest investigations of antitrust behavior since the turn of the century. You are supporting the Government, research and present a cohesive argument to the other si..

  Best investment opportunity for linda

Linda inherited a sum of $50,000 from one of her grandparents. She would like to wisely invest the inheritance in one of the following three investment opportunities available for a period of 10 years. Help choose the best investment opportunity for ..

  Find the total revenue of the monopolist when it sells 6

using a spreadsheet like the following entering formulas for the total revenue and consumers surplus for the total

  Write the conditions of efficient resolution to this

my neighborsare college students who sometimes have late-night parties. assume that the nuisance cost of these parties

  Why would china want its own currency to be undervalued

why would china want its own currency to be undervalued relative to the us dollar? how can china maintain an

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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