As the lockdown around the traveling destinations of the world began to ease and there is an increase in the demand for tourism services. Following is the demand schedule for the two traveling destinations Turkey and Malaysia. Quantity Quantity Demanded Turkey Price Demanded Malaysia 150,000 65,000 50,000 300,000 48,000 55,500 450,000 30,000 58,000 a. Using the midpoint formula calculate the price elasticity of demand when price increased from 150,000 to 300,000. Also explain and illustrates if the demand is elastic or inelastic. b. Find the cross-price elasticity of demand if the price of turkey package increased from 300,000 to 450,000. Explain if the two goods in question are substitute and complements. c. With the reference to your answer ih part (a), suppose you are asked as a manager of traveling company to ensure maximum revenue generation for your firm in Turkey. Justify how you would increase the firm revenues.

As the lockdown around the traveling destinations of the world began to ease and there is an increase in the demand for tourism services. Following is the demand schedule for the two traveling destinations Turkey and Malaysia. Quantity Quantity Demanded Turkey Price Demanded Malaysia 150,000 65,000 50,000 300,000 48,000 55,500 450,000 30,000 58,000 a. Using the midpoint formula calculate the price elasticity of demand when price increased from 150,000 to 300,000. Also explain and illustrates if the demand is elastic or inelastic. b. Find the cross-price elasticity of demand if the price of turkey package increased from 300,000 to 450,000. Explain if the two goods in question are substitute and complements. c. With the reference to your answer ih part (a), suppose you are asked as a manager of traveling company to ensure maximum revenue generation for your firm in Turkey. Justify how you would increase the firm revenues.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter5: Elasticity

Section: Chapter Questions

Problem 29CTQ: A city has build a bridge over a river and it decides to charge a toll to everyone who crosses. For...

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Explain why using the midpoint formula for calculating the elasticity of demand gives the same result whether price increases or decreases, but using the initial price and quantity instead of the average does not.
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