Question

1. What effect, if any, does each of the following events have on the price elasticity of demand for corporate-owned jets?

a. The cost of manufacturing corporate jets rises

b. Reduced corporate earnings lead to cuts in travel budgets and increase the share of expenditures on corporate jet travel.

2. Since the movie, Avatar, 3-D movies have been popular and charged at a higher price, compared with the traditional 2-D movies.

a. Please analyze the impact of 3-D movies on Price elasticity of demand on 2-D movies

Please answer all of the two questions by one paragraph for each sub-question in one posting.

b. Total revenue (including 2-D and 3-D movies) of theater box offices

Answer 1

What effect, if any, does each of the following events have on the price elasticity of demand for corporate-owned jets?

a. The cost of manufacturing corporate jets rises.

Demand elasticity is the how sensitive the demand for a good is to the changes in other economic factors such as the consumer incomes and the prices. The elasticity of demand measures a change in demand for the goods when other factors of the economy changes. When the cost of manufacturing jets rises, their price elasticity of demand will rise in the same way. This will lead to low demand of the jets. This is because the price elasticty of demand measures the responsiveness of changes in demand in price for a specific good. The demand for the jets will therefore be inelastic. The corporate owned-jets shall reduce its purchase of the jets or in other words, when the price elasticity of demand of the jets increases or rises, the demand for the jets by the corporate reduces.

Reduced corporate earnings lead to cuts in travel budgets and increase the share of expenditures on corporate jet travel.

When the corporate earnings go down, then this shall transform to loss to the company. This will results to no or less purchase of the jets since the prices for maintenance and even servicing the jets shall be inelastic. Increase in the share of the expenditures on the corporate jet travel shall also lead to the price inelasticity of demand of the jets. This is because more jets to the jet-owned corporate means loss to the same corporate or in other words, there shall be high output than there shall be input to the corporate.

Since the movie, Avatar, 3-D movies have been popular and charged at a higher price, compared with the traditional 2-D movies. Please analyze the impact of 3-D movies on

                  The price elasticity of demand on 2-D movies

According to CORY D, (2012).,At that particular time, the 2-D and 3-D markets are intertwined as the number of the movie theaters and the seats are minimal, at least in the short-run. Therefore, the story would not be complete without taking into the consideration the theater operators’ decision on the prices. The 3-D premium charges will be eliminated and raise the price of the 2-D movies to establish the difference. This will give the owners of the movies a rage. Among the bigger changes will see the 3D-upcharge go away. 3D charges will assist in increasing the overall price of the ticket price, though as an industry; there will be an emergence of blend. The 2D prices will increase, while the 3D movies, prices will decrease.

The total revenue of movie theater box offices

The total revenue for the movie theater may go down or decrease since both 2D and 3D movies are not selling the same, though they may have same purchasing expenses or one may have higher purchasing price than the other.