The income elasticity of demand for good measures the responsiveness of _____to a change in ______

/in /by

The income elasticity of demand for good measures the responsiveness
of _____to a change in ______

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Assume you are making business decision on alternative two businesses under determined risks. Given the following probability of the risks and estimated profit, (5 marks) a. Calculate the expected profit you could get under each risk probabilities for the business alternatives. b. Which business do you select based on the expected profit? c. By constructing a discrete probability distribution, which business do you select? d. By calculating the expected mean values, variance, standard deviation and coefficient of variation, which business do you select? Business Economic Condition Probability Outcome/ Profit Expected Profit Y Good economic condition/boom 0.2 900 Normal economic condition 0.5 800 Bad economic condition/recession 0.3 700 Expected Profit Z Good economic condition/boom 0.2 1000 Normal economic condition 0.5 800 Bad economic condition/recession 0.3 600 Expected Profit
Your finance officer has just advised you that the public transport system faces a deficit. Your board does not want you to cut service, which means that you cannot cut costs. Your only hope is to increase revenue? Would a fare increase boost revenue? You consult the economist on your staff who has researched studies on public transportation elasticities. She reports that the estimated price elasticity of demand for the first few months after a price change is about-0.3, but that after several years, it will be about -1.5. i. Explain why the estimated values for price elasticity of demand differ. ii. Compute what will happen to ridership and revenue over the next few months if you decide to raise fares by 5%. iii. Compute what will happen to ridership and revenue over the next few years if you decide to raise fares by 5%. iv. What happens to total revenue now and after several years if you choose to raise fares?
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For a price floor to be effective, it must be set ________ the equilibrium price, while a price ceiling must be set ________ the equilibrium price to be effective. A. below; above B. above; below C. below; below D. above; above
Suppose that the quantity of corn supplied depends on the price of corn (_P_) and the amount of rainfall (_R_). The demand for corn depends on the price of corn and the level of disposable income (_I_). The equations describing the supply and demand relationships are _Q__s__ _= 20_R _+ 100_P _and _Q__d__ _= 4000 − 100_P _+ 10_I_. a) Sketch a graph of demand and supply curves. b) Sketch a graph that shows the effect of an _increase _in rainfall on the equilibrium price and quantity of corn. c) Sketch a graph of demand and supply curves that shows the effect of a _decrease _in disposable income on the equilibrium price and quantity of corn.
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