The Acmeville Metropolitan Bus Service currently charges $0.88 for an all-day ticket, and has an average of 623 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must therefore find a way to increase revenues. The bus company is considering increasing the ticket price to $1.11. The marketing department's studies indicate this price increase would reduce usage to 346 riders per day. Calculate the absolute value of the price elasticity of demand for bus tickets using the simple percentage change method. Round your answer to one decimal place.

The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales have averaged about 6,000 units per month during the past year. In August, Potomac's closest competitor, Spring City Stove Works, cut its price for a closely competitive model from $600 to $545. Potomac noticed that its sales volume declined to 4,500 units per month after Spring City announced its price cut.   a) What is the arc cross elasticity of demand between Potomac's oven and the competitive Spring City model?   b) If Potomac knows that the arc price elasticity of demand for its ovens is −2.0, what price would Potomac have to charge to sell the same number of units it did before the Spring City price cut?

Q1. Suppose the government is considering an increase in the toll on a certain stretch of highway from $3 to $4. At present, 1 million cars per week use that highway stretch; after the toll is imposed, the number of cars per week will change according to its price elasticity of demand of -0.8 (this elasticity value is estimated based on the initial-value method). If the marginal cost of highway use is constant (i.e., the supply curve is horizontal) and equal to $3 per car, what is the net annual cost to society attributable to the increase in the toll? (your answer must be rounded off to the nearest million dollars per year, i.e., no decimal places; there are 52 weeks in a year)

Mf2.

A company has established that the relationship between the price for one of its products is approximately p = 88.5 – 0.08D0.75 In addition there is a fixed cost of $45,000 per year and the variable cost to manufacture the product is $45 per unit. What level of demand maximizes the total revenue? Ans. is Blank 1 What level of demand maximizes the total profit for this product? Ans. is Blank 2 Blank 1 Add your answer Blank 2 Add your answer

a)The CEO of Globe Movie Theatre Limited has hired you as a consultant to advise on the ticket-pricing strategy. As a basis of your recommendations, you consider the historical ticket-sales data which seems to suggest the following ticket-sales elasticities: Own-price elasticity                = -0.05 Refreshment price elasticity    = -0.12 Nairobi population elasticity   = +0.67 Advertising elasticity              = +0.70 i)The CEO is contemplating a moderate increase in ticket prices in order to increase revenue. Explain whether this is a good idea.                                                                                ii)The CEO is contemplating a moderate increase in the advertising budget in order to increase revenue. Is this a good idea? Explain.                                                                               If the population of Nairobi increased from 2million to 2.2million in the next one year, what would be the resulting impact on ticket demand? Assume…

Suppose you own a tax preparation services company, with fixed costs of $3,000/month and marginal costs of $25/appt.If the price is $60/appt, 500 appointments would be sold. If the price is $50/appt, 760appointments would be sold. a.)Use these figures to calculate the price elasticity of demand for your services. b.)Calculate the monthly profits and profit margins (profit/revenue) associated with the price of $60/appt and $50/appt. c.)Given these calculations, what price should you charge for your services, $50/apptor $60/appt? Explain

The optimal mark-up is:  m = -1/ (E+1).  When the mark-up on cookware equals 50%, then demand elasticity (E) for cookware is:

Air Canada announces a 15% off sale on its flights, so fans can watch Toronto Raptors play against the Golden State Warriors in the NBA Finals. What effect will this sale have on Air Canada's flights to destinations other than Canada?

Smooth Sailing, Inc., has estimated the demand function for its sailboats (quantity purchased annually) as follows: Qp = 89, 830 – 40PS + 20PX + 15P, + 21 + 0.001A + 10W %3D Where, QD = quantity purchased, Ps= the price of smooth sailing sailboats, Px= the price of Company X's sailboat, Pr = the price of Company Y's motorboat, I= per capita income in dollars, A = dollars spent on advertising, and W = number of favorable days of weather in the southern region of the United States. a) Suppose that Ps = $9,000, Px= $9,500, Py = $10,000, I= $15,000, A = $170,000, and W = 160. Find the price elasticity of demand at that point. %3D b) Is Ep elastic, inelastic, or unitary elastic in part (a)? Justify?