Question

In: Economics

On most normal weekends, Spirit of Melbourne charges only half the normal price for a one-way...

On most normal weekends, Spirit of Melbourne charges only half the normal price for a one-way trip from Melbourne to Devonport. This usually attracts double the passengers compared to weekdays. On holiday weekends, however, the half-price fare only attracts 10 per cent more passengers. From this information we can say that, compared to holiday weekends, the demand for the trip on normal weekends is:

a) less elastic.

b) more elastic.

c) unitary elastic.

d) perfectly elastic.

e) perfectly inelastic.

Solutions

Expert Solution

Price elasticity of demand is equal to percentage change in quantity demanded divided by percentage change in price.

As here only price effect is given on the demand so here we have to find price elasticity of demand.

From the given information we can say that, compared to holiday weekends, the demand for the trip on the normal weekends is more elastic.

It is more elastic because on the same change in the price (half the normal price) more no. of passenger are attracted i.e. double the passengers. While on the same change in the price (half the normal price) only 10 percent more passagers in the weekend so demand for trip on the normal weekends is more elastic compared to holiday weekend.

In other words, more no. (quantity) of trip is demanded is when the same price change (half) in the normal weekends than the holiday weekends.

Mathematically,

Price elasticity of demand in normal weekends = 20% / 50%

= 0.4

Price elasticity of demand in holiday weekends = 10% / 50%

= 0.2

So 0.4 > 0.2

More elastic demand on normal weekends compared to holiday weekends.

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

In what way(s) is a monopolistically competitive firm inefficient? a. it charges a price lower than...
In what way(s) is a monopolistically competitive firm inefficient? a. it charges a price lower than marginal cost b. it does not produce at the minimum of its average cost curve c. it produces where marginal revenue is equal to marginal cost
One car has twice the mass of a second car, but only half as much kinetic...
One car has twice the mass of a second car, but only half as much kinetic energy. When both cars increase their speed by 7 m/s, they then have the same energy. What were the original speeds of the two cars?
One car has twice the mass of a second car, but only half as much kinetic...
One car has twice the mass of a second car, but only half as much kinetic energy. When both cars increase their speed by 9.0 m/s , they then have the same kinetic energy. a)What were the original speeds of the two cars?
I ranked the steam engine as one of the half dozen most important inventions in history...
I ranked the steam engine as one of the half dozen most important inventions in history – explaining how, even if obsolete nowadays, it was the first engine able to generate power, a technology that revolutionized our ability to do something we could never do before. Choose five other inventions you think would similarly round out the top half dozen, and make a good case as to how each merits the important position you gave it in the progress of...
A price index is NOT Select one: a. an inflation rate. b. a way to track...
A price index is NOT Select one: a. an inflation rate. b. a way to track the prices for a group of products c. a weighted average price of some type of good or service (e.g. consumer prices). d. the cost of a specific basket of goods and services. Henry accepted a new position at a ball bearing manufacturing plant after graduation from college. With his macroeconomic education, Henry has been asked to advise the best way to measure inflation...
The Cost of Producing Wine at Only a Small Fraction of the Price Most consumer goods...
The Cost of Producing Wine at Only a Small Fraction of the Price Most consumer goods are not sold by the manufacturer. Instead, they are produced by the manufacturer, who sells to a wholesaler, who in turn sells to a retailer, who sells to the public. Such is the case with most wine. There has been an outcry in recent years over increases wine in prices. Although prices have risen sharply, the multilevel market structure and the markup that occurs...
The Cost of Producing Wine at Only a Small Fraction of the Price Most consumer goods...
The Cost of Producing Wine at Only a Small Fraction of the Price Most consumer goods are not sold by the manufacturer. Instead, they are produced by the manufacturer, who sells to a wholesaler, who in turn sells to a retailer, who sells to the public. Such is the case with most wine. There has been an outcry in recent years over increases wine in prices. Although prices have risen sharply, the multilevel market structure and the markup that occurs...
One turn of the CAC only produces one ATP (or GTP). Explain how most of the...
One turn of the CAC only produces one ATP (or GTP). Explain how most of the energy of the four oxidation steps in the CAC is conserved? Please help explain and where could I find more information on this
Q4. In most management contexts, there is no “one best way” to managing resistance. Explain the...
Q4. In most management contexts, there is no “one best way” to managing resistance. Explain the organizational development ( OD) approach that was applied in the case study by Rose reflecting it from the different approaches to managing resistance in your course work. Case study MARKS AND SPENCER Stuart Rose, the CEO of Marks & Spencer, started with emphasising the critical need for change – by emphasising that the current state was untenable. Rose noted that inventory was not being...
You have just completed the first half of one of the most challenging yet exhilarating classes...
You have just completed the first half of one of the most challenging yet exhilarating classes of your college career. You are 19 years old. After listening to the wise words of your awesome professor and the thrilling representatives from Calm Waters Financial, you have decided being a millionaire is well within your reach. You decide you want to be a millionaire by the age of 59. You have looked around and found a mutual fund that expects an average...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT