Following is the demand schedule for the two traveling destinations Turkey and Malaysia. Price Quantity Demanded Turkey Quantity 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 in 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.
Following is the
|
|
Quantity Demanded Turkey |
Quantity 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
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 in 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.
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