The elasticity of demand for the London Underground is estimated to be around -0.3 in the short term (one to two years). In 2018 there were around 1,400 million passenger journeys on the London Underground. Revenue from the London Underground in 2018 was £2,669 million. For 2019, Transport for London would like to increase the average fare by 4%. Explain and answer the following questions: a)In 2018, what is the average fare for the London Underground? b)How large (in £) is the 4% increase of the average fare? c)How many journeys will there be after the fare increase? d)How much extra revenue is raised if the average fare is increased by 4%?

The elasticity of demand for the London Underground is estimated to be around -0.3 in the short term (one to two years). In 2018 there were around 1,400 million passenger journeys on the London Underground. Revenue from the London Underground in 2018 was £2,669 million. For 2019, Transport for London would like to increase the average fare by 4%. Explain and answer the following questions: a)In 2018, what is the average fare for the London Underground? b)How large (in £) is the 4% increase of the average fare? c)How many journeys will there be after the fare increase? d)How much extra revenue is raised if the average fare is increased by 4%?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter6: Simple Pricing

Section: Chapter Questions

Problem 10MC

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The elasticity of demand for the London Underground is estimated to be around -0.3 in the short term (one to two years). In 2018 there were around 1,400 million passenger journeys on the London Underground. Revenue from the London Underground in 2018 was £2,669 million. For 2019, Transport for London would like to increase the average fare by 4%. Explain and answer the following questions: How large (in £) is the 4% increase of the average fare? How many journeys will there be after the fare increase? How much extra revenue is raised if the average fare is increased by 4%?
The table below provides elasticity estimates, use them to answer the questions that follow. Type of Elasticity Estimate Price elasticity of demand for uber rides -1.20 Price elasticity of demand for taxis -0.60 Cross-price elasticity of demand for uber and taxis 0.50 Income elasticity of demand for uber rides 0.95 Price elasticity of supply for taxis 0.40 Suppose there was a 15% decline in the quantity of ubers, what would be the effect on price? a.+9 % b. +25% 0c-9% Od.+12.5%
Transport operators in Belize received permission to increase their fares 15percent, and they anticipated that revenues would increase by about 15percent. When the 15 percent increase was enacted revenues increased by only about 5 percent. What can you infer about the elasticity of demand for transportation? What were operators assuming about the elasticity of demand
Evidence suggests that the cross elasticity of demand between private and public transport, although positive, is low. Therefore it follows that: A fall in the demand for private transport would cause a small rise in the price of public transport A fall in the demand for private transport would cause a small rise in the demand for public transport The effects cannot be determined from the information given A rise in the price of private transport would cause a small rise in the demand for public transport A fall in the price of private transport would cause slight rise in the demand for public transport Some other answer
You have the following information for your product:i. The price elasticity of demand is -0.9.ii. The income elasticity of demand is 0.5.iii. The cross-price elasticity of demand between your good and a related goodis 2.0.What can you determine about consumer demand for your product from thisinformation?b) The price elasticity of demand for urban transit fares has been estimated to liebetween -0.1 and -0.6. Based on these results, what is the economic argument for raisingtransit fares? What political arguments might local governments and transit authoritiesencounter in opposition to these economic arguments?
Hello! The questions is as follows: The U.S. Tobacco Settlement between the major tobacco companies and 46 states caused the price of cigarettes to jump 45Cent (21%) in November 1998. Levy and Meara (2005) found only a 2.65% drop in prenatal smoking 15 months later. What is the elasticity of demand for this group? Would I take -2.65% and divide that by 21%? Thanks in advance!
In this problem, p is in dollars and q is the number of units. Suppose that the demand for a product is given by 2p?q = 30,000 + 7000p2. (a) Find the elasticity when p = $50 and q 3506. (Round your answer to four decimal places.) (b) Tell what type of elasticity this is: unitary, elastic, or inelastic. Demand is unitary elastic. Demand is elastic. Demand is inelastic. (c) How would revenue be affected by a price increase? An increase in price decreases revenue. Revenue is unaffected by price. An increase in price increases revenue.
Harding Enterprises has developed a new product called the “Quest Simulator (QS)”. The market demand for this product is given as follows: Q = 240 - 4P. If QS is priced at $40, what is the point price elasticity of demand? Is demand elastic or inelastic? What is the maximum amount that consumers are willing to pay for the quantity demanded at the price of $40? (hint: it includes both the total expenditures and the consumer surplus) If the price of QS is increased slightly from $40, what will happen to the total expenditure on the product? What will happen to the consumer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
The price elasticity of demand for residential energy in the U.S. is estimated by some researchers to be -0.24. Approximately, what percentage change in the price of residential energy induces an increase of 1% in its consumption? 4.17% increase 8.23% increase 24% increase 4.17% decrease 24 % decrease
Suppose the elasticity of demand for used cars is estimated to be 3. What does this mean? What will be the effect on the quantity demanded for used cars if the price rises by 10 Percent? Suppose a university raises its tuition from $3,000 to $3,500. As a result, student enrollment falls from falls from 5,000 to 4,500. Calculate the price elasticity of demand. Is demand elastic, unitary elastic, or inelastic? Suppose the movie theater raises the price of popcorn 10 percent, but customers do not buy any less of it. What does this tell you about the price elasticity of demand, and what will happen to total revenue as a result of the price increase? Suppose the income elasticity of demand for furniture is 3 and the income elasticity of demand for physician services is 0.3. Compare the impact on furniture and physician services of a recession that reduces consumer income by 10%. Opponents of increasing the tax on gasoline argue that the big oil companies just pass the tax…
16. As a newly college graduate with a BA degree in Economics, you are being asked to evaluate the following situations involving elasticity: SMC would like to increase its enrollment of international students by 5% in the Fall of 2021; its current per unit price is $250 and that its elasticity of demand is -0.7 To achieve SMC's enrollment target of 5%, you would suggest that it should its tuition per unit by % and that the new per unit price be at $ O raise ; 7.14 ; 232.14 cannot be computed based on information provided lower; 7.14 ; 232.14 lower; 14 ; 215 lower; 7; 238
Use the article to answer question https://www.abc.net.au/news/2021-02-01/quarantine-contracts-hotel-industry-slow-recovery-covid19/13098452 What could you predict about the income elasticity of the demand for CBD 5-star hotel rooms before Covid? Based on what Mr Cloutman described, consumers are starting to associate these luxury hotels as quarantine hotels. How would this change the income elasticity of the demand for them?