The graph below shows the dsily demand for entry into the downtown core of a major city by commuter vehicles and shoppers'vehicles if they were required to pay a special traffic fee in order to enter.a. Draw the total demend curve. Plot only three points of the curve.CommutersShoppers28ToolsTotal demand20161212243648607284Number of vehicles per day (tens of thousands)b. Assuming that there is no charge for entry, what is the total number of vehicles entering downtown? (Give your answers in tens ofthousands of vehicles.)Quantity of vehicles:c. Suppose that government, in an effort to reduce the number of vehicles by 50 percent, decides to impose a traffic fee (the seme feefor both commuters and shoppers) for entry into the downtown areo. What will be the amount of the fee, and how many of each groupwill enter downtown?Fee: $Number of commuter vehicles:Number of shoppers'vehicles:d. Assume that government, alternatively, decides to have a two-fee system but still wishes to reduce the traffic by 50 percent of theno-fee entry level. If it decides to charge shoppers $4, how much will it have to charge commuters?Fee to commuters: $Traffic fee24

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The graph below shows the daily demand for entry into the downtown core of a major city by commuter vehicles and shoppers" vehicles if they were required to pay a special traffic fee in order to enter a Draw the total demand curve. Plot only three points of the curve. Commuters Shoppers 28 Tools 24 Total demand 20 16 12 24 36 48 60 72 B4 12 Number of vehicles per day (tens of thousands) b. Assuming that there is no charge for entry. what is the total number of vehicles entering downtown? (Give your answers in tens of thousands of vehicles.) Quantity of vehicles: c. Suppose thet govermment, in an effort to reduce the number of vehicles by 50 percent, decides to impose a traffic fee (the same fee for both commuters and shoppers) for entry into the downtown area. What will be the amount of the fee, and how many of esch group will enter downtown? Fee: S Number of commuter vehicles: Number of shoppers'vehicles: Traffic fee 00

The graph below shows the daily demand for entry into the downtown core of a major city by commuter vehicles and shoppers" vehicles if they were required to pay a special traffic fee in order to enter a Draw the total demand curve. Plot only three points of the curve. Commuters Shoppers 28 Tools 24 Total demand 20 16 12 24 36 48 60 72 B4 12 Number of vehicles per day (tens of thousands) b. Assuming that there is no charge for entry. what is the total number of vehicles entering downtown? (Give your answers in tens of thousands of vehicles.) Quantity of vehicles: c. Suppose thet govermment, in an effort to reduce the number of vehicles by 50 percent, decides to impose a traffic fee (the same fee for both commuters and shoppers) for entry into the downtown area. What will be the amount of the fee, and how many of esch group will enter downtown? Fee: S Number of commuter vehicles: Number of shoppers'vehicles: Traffic fee 00

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter5: Elastic And Its Application

Section: Chapter Questions

Problem 10PA

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Similar questions

An increase in the supply of a good will decrease the total revenue producers receive if a. the demand curve is inelastic. b. the demand curve is elastic. c. the supply curve is inelastic. d. the supply curve is elastic.
Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?
A city has build a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion? Explain.
Can you think of an industry (or product) with near infinite elasticity of supply in the short term? That is, what is an industry that could increase Qs almost without limit in response to an increase in the price?
Describe the general appearance of a demand or a supply curve with infinite elasticity.
The New York Times reported (Feb. 17, 1996) that subway ridership declined after a fare increase: There were nearly four million fewer riders in December 1995, the first full month after the price of a token increased 25 cents to 1.50, than in the previous December, a 4.3 percent decline. a. Use these data to estimate the price elasticity of demand for subway rides. b. According to your estimate, what happens to the Transit Authoritys revenue when the fare rises? c. Why might your estimate of the elasticity be unreliable?
Describe the general appearance of a demand or a supply tune with zero elasticity.
Why is the demand curve with constant unitary elasticity concave?
2) Suppose there are 30 companies in a commercial building. Initially there is no fire sprinklery Sysstem in the public area of the building. The companies have identical individual demand curve for the fire sprinklers which is given by the equation: P = 10 - 0.5 Q, where P is the price of fire sprinkler and Q is the quantity of fire sprinkler: (a) Explain why the fire sprinkler system can be considered as a public good. (Hint: try to explain beyond repeating the definitions.) (b) Suppose each fire sprinkler costs $45. What is the optimal quantity of fire sprinklers to be Installed? (Hint: calculate and explain the social marginal benefit function of the fire sprinklers.) (c) Explain why it is difficult for this commercial building to install the optimal quantity of fire sprinklers if there is no central party to coordinate the installation.
Consider public policy aimed at smoking.a. Studies indicate that the price elasticity of demandfor cigarettes is about 0.4. If a pack of cigarettescurrently costs $5 and the government wantsto reduce smoking by 20 percent, by how muchshould it increase the price?b. If the government permanently increases theprice of cigarettes, will the policy have a largereffect on smoking one year from now or five yearsfrom now?c. Studies also find that teenagers have a higherprice elasticity of demand than adults. Why mightthis be true?
Taiwan is a major world supplier of semiconductor chips. A recent earthquake severely damagedthe production facilities of Taiwanese chip-producing companies, sharply reducing the amount of chipsthey could produce.a. Assume that the total revenue of a typical non-Taiwanese chip manufacturer rises due to theseevents. In terms of an elasticity, what must be true for this to happen? Illustrate the change in totalrevenue with a diagram, indicating the price effect and the quantity effect of the Taiwan earthquake onthis company’s total revenue.b. Now assume that the total revenue of a typical non-Taiwanese chip manufacturer falls due to theseevents. In terms of an elasticity, what must be true for this to happen? Illustrate the change in totalrevenue with a diagram, indicating the price effect and the quantity effect of the Taiwan earthquake onthis company’s total revenue.
In Class, 10–25 Minutes for Teams For each of thefollowing products, determine at least three differentprices that might be charged. Then survey each of theindividuals within your group to find out how much ofeach product they would buy at each price point foreach of the products. For each product, calculate theprice elasticity of demand to determine whether thedemand is elastic or inelastic.a. Cheese pizzas per monthb. Movie tickets per monthc. Concert tickets per year