You are an economist for the City Subway Commission. Presently, the price of a subway ride is 80 cents, and 250000 seats are filled weekly. The price elasticity of demand for subway rides is -0.40, and the income elasticity of demand is -0.60. (A) If a recession lowered area incomes by 5%, how many additional seats per week would the subway need?

You are an economist for the City Subway Commission. Presently, the price of a subway ride is 80 cents, and 250000 seats are filled weekly. The price elasticity of demand for subway rides is -0.40, and the income elasticity of demand is -0.60. (A) If a recession lowered area incomes by 5%, how many additional seats per week would the subway need?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 6QP: Suppose a straight-line downward-sloping demand curve shifts rightward. Is the price elasticity of...

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Suppose you learned that the price elasticity of demand for wheat is 0.7 between the current price for wheat and a price 2 higher per bushel. Do you think that farmers collectively would try to reduce the supply of wheat and drive the price up 2 higher per bushel? Explain your answer. Assuming that they would try to reduce supply, what problems might they have in actually doing so?
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Suppose a straight-line downward-sloping demand curve shifts rightward. Is the price elasticity of demand higher, lower, or the same between any two prices on the new (higher) demand curve than on the old (lower) demand curve?