Suppose you are asked to evaluate the incremental benefits an environmental policy using the travel cost method. The user charge for an environmental amenity is $20 per visitor. The pre and post recreational demand functions, respectively, are given as follows P=72-0.04V0 P = 90 -0.04V1
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- The travel time (t) on the segment of a highway connecting city A with city Bhas been observed to follow the equation below, as a function of traffic flow(v): t = 15 + 0.02v, where t and v are measured in minutes and vehicles perhour, respectively. The demand function for travel connecting the two cities isv = 3500 – 120t.a) Determine the equilibrium time and traffic flow.b) If the length of the highway segment is 30 kilometres, what is the averagespeed of vehicles traversing this segment at equilibrium conditions?A friend of yours is considering two movie - streaming services. Provider A charges $120 per year regardless of the number of movies streamed. Provider B does not have a fixed service fee but instead charges $1 per movie. Your friend's annual demand for movies is given by the equation Qd = 150 - 50P, where P is the price per movie. (a) With each provider, what is the cost to your friend of an extra movie? (b) In light of your answer to (a), how many movies with each provider would your friend watch? (c) How much would she end up paying each provider every year? (d) How much consumer surplus would she obtain with each provider? (Hint: Graph the demand curve and recall the formula for the area of a triangle.) (e) Which provider would you recommend that your friend choose? Why?An oil-producing country estimates that the demand for oil (in millions of barrels per day) is D(p) = 9.5e-0.01p, where p is the price of a barrel of oil. (a) Determine the elasticity of demand function, E(p), for the oil. (b) Complete the table below and then identify the price per barrel, p, that maximizes revenue. Price per barrel, p Elasticity, E(p) 80 90 100 110 120
- Suppose you are asked to evaluate the incremental benefits an environmental policy using the travel cost method. The user charge for an environmental amenity is $20 per visitor. The pre and post recreational demand functions, respectively, are given as follows P = 72 − 0.04V0 P = 90 − 0.04V1.A movie theater has been charging $ 10.00 per person and selling about500 tickets on Saturday and Sunday nights. After surveyingtheir customers, theater owners estimate that for every 50 cents theylower the price, the number of attendees will increase by 50 per night.Find the demand function and calculate the consumption surplus whentickets are sold for $ 8.00.(a) Show that the function Q = a/P* , where a and c are constants, has a constant elasticity of demand: ɛg = -c. (b) (i) Determine the elasticity of demand for train journeys on a given route when the demand function is Q = 1200/P|.2, where Q is the number of fares in thousands. (ii) If the fare increases by 5%, use elasticity to calculate the percentage change in demand. (iii) If the fare decreases by 5%, use elasticity to calculate the percentage change in demand.
- The demand function for a Christmas music CD is given by q = 0.75(2500 – p²) where a (measured in units of á hundred) is the quantity demanded per week and p is the unit price in dollars. (a) Evaluate the elasticity at p= 45. E(45) (b) Given the computed elasticity value in part (a), is the Christmas music CD an Elastic or Inelastic item? ? (c) Should the unit price be lowered slightly from p= 45 in order to increase revenue? ? (d) Find the value for E to maximize revenue. E =Multichoice company broadcasts to subscribers in Lusaka and Solwezi. The demand for each ofthese two groups are Qsz= 50 - (1/3) Ps and QUSK= 80 - (2/3) Pusk, where Q is in thousands ofsubscriptions per year and P is the subscription price per year. The cost of providing Q units.ofservice is given by C (Q) = 1000 + 30Q, where Q = Qsz + QusK. Assuming Multichoice is aMonopoly and can engage in third-price discrimination, then1. What is the profit-maximizing price and quantity in Solwezi Market?2. What is the profit-maximizing price and quantity in Lusaka Market?3. Suppose the Monopoly can only charge a single. What price should it charge and what isthe total quantity sold?Consider the demand function for bicycles in South Florida: Q = 24 + 3Y – 1.2P where: Q is quantity demanded, Y is monthly income, and P is the price per unit. If/when P = $54, and Y = $2,300, (a) Find the quantity of bicycles that would be sold. (b) Calculate the amount of the seller's total revenue. (c) Compute the price-elasticity of demand (Ep) for bicycles. (d) Interpret your result in (c). (e) Compute the income-elasticity of demand (Ey) for bicycles. (f) Interpret your result in (e).
- (a) The inverse demand function for taxi-apps is estimated to be p = 100-2Q. If the price increases from 20 to 3O, then by how much does consumer surplus change?When the price of candy bars increased from $0.45 to $0.55, the quantity demanded changed from 21,000 per day to 19,000 per day. In this price range, the price elasticity of demand coefficient (based on the midpoint formula) for candy bars is A) -1. B) -0.18. (C) -2. D -0.5.Refer to the Figure below. In Panel (b), the increase in total cost of producing the original quantity of output at the new cost associated with increased environmental regulations would be $ $ P₂ P₁ P₂ P₁ a Demand ₂ e (a) Demand 92 91 Quantity of output (b) 4₁ Quantity of a) p2 x r₁. b) (d + e + f). c) p2 x r₂. G₂ C₁ G₂ C₁₁