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Elasticity cases, transport and vanity plates
Economists have estimated the following transportation elasticities. For each pair, explain possible reasons why the elasticities differ. a. elasticity of demand for buses is 0.23 during peak hours and 0.42 during off-peak hours b. elasticity of demand for buses is 0.7 in the short run and 1.5 in the long run c. elasticity or demand for toll roads is 4.7 for low-income commuters and 0.63 for high-income commuters.
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A study found that in California, where car vanity license plates cost $28.75, the elasticity of demand was 0.52. In Massachusetts, where vanity plates cost $50, the elasticity of demand was 3.52. a. Assuming vanity plates have zero production cost, was each state collecting the maximum revenue it could from vanity plates? Explain your reasoning. b. What recommendation would you have for each state to maximize revenue? c. Which state was most likely to be following a political unsupportable policy?
Are they required to ensure economic growth and a prosperous country.
Suppose instead that the government wishes to impose a value tax of $0.25 on each dollar of the consumer's expenditure on good 1.Show the effect of imposing this tax in a graph containing before and after budget lines.
Explain why fiscal policy will be either more or less effective in an economy with a large foreign sector.
Obtain the market clearing price and quantity. Under the assumption of profit and maximization , how much output should the representative firm produce?
"Most of the firms spend considerable amounts of money on advertisement". Explain advertising elasticity of demand and its practical applications in this context.
Compute the implied arc price elasticity of demand. Is a further price decrease warranted.
If the MPC = 0.94, C 0 = 45, I = 150, G = 125, T = 75, X = 50 & IM = 60: Write out the consumption function. Compute the simple multiplier.
If a monopolist is creating a level of output at which demand is inelastic and the firm is not maximizing profits.
Graph the isoquant that these calculations imply. Explain in very clear and complete terms why the isoquant has the shape that you observe.
Joan is deciding where to spend her spring break. If she goes to Cancun, Mexico, the trip will give her 9,000 utils of satisfaction and will cost her $300. If, instead, she travels to Florida, the trip will give her 5,000 utils of pleasure and w..
Illustrate the notion that people are rational respond to incentives consider an experiment conducted by researchers at St. Luke's Roosevelt Hospital in New York City.
Illustrate what are the major differences among an open and closed economy
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