d. Owners of vacation homes in Maine rent them out during the summer. Due to the soft economy this year, a 30% decline in the price of a vacation rental leads more than half of homeowners to occupy their vacation homes themselves during the summer. In each of the following cases, do you think the price elasticity of supply is (i) perfectly elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; or (iv) inelastic, but not perfectly inelastic? a. An increase in demand this summer for luxury cruises leads to a huge jump in the sales price of a cabin on the Queen Mary 2. b. The price of a kilowatt of electricity is the same during periods of high electricity demand as during periods of low electricity demand. c. Fewer people want to fly during February than during any other month. The airlines cancel about 10% of their flights as ticket prices fall about 20% during this month.
d. Owners of vacation homes in Maine rent them out during the summer. Due to the soft economy this year, a 30% decline in the price of a vacation rental leads more than half of homeowners to occupy their vacation homes themselves during the summer. In each of the following cases, do you think the price elasticity of supply is (i) perfectly elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; or (iv) inelastic, but not perfectly inelastic? a. An increase in demand this summer for luxury cruises leads to a huge jump in the sales price of a cabin on the Queen Mary 2. b. The price of a kilowatt of electricity is the same during periods of high electricity demand as during periods of low electricity demand. c. Fewer people want to fly during February than during any other month. The airlines cancel about 10% of their flights as ticket prices fall about 20% during this month.
Chapter6: Elasticities
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:d. Owners of vacation homes in Maine rent them out during the summer. Due to the
soft economy this year, a 30% decline in the price of a vacation rental leads more than
half of homeowners to occupy their vacation homes themselves during the summer.
Transcribed Image Text:In each of the following cases, do you think the price elasticity of supply is (i) perfectly
elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; or (iv) inelastic, but
not perfectly inelastic?
a. An increase in demand this summer for luxury cruises leads to a huge jump in the
sales price of a cabin on the Queen Mary 2.
b. The price of a kilowatt of electricity is the same during periods of high electricity
demand as during periods of low electricity demand.
c. Fewer people want to fly during February than during any other month. The airlines
cancel about 10% of their flights as ticket prices fall about 20% during this month.
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