The Price Elasticity Of Demand For Metlink Train Tickets

Submitted By JoHigh1
Words: 1584
Pages: 7
Open Document
Question 1
A) POINT ONE
P1=$2.26
Q1=620.82

The price elasticity of demand using the midpoint method can be calculated with the following equation:
= (Q2-Q1)/ ((Q2+Q1)/2) (P2-P1)/ ((P2+P1)/2)

Using the values given, the equation is as follows:

= (580270-620820)/ ((580270+620820)/2)
($3.39-$2.26)/ (($3.39+$2.26)/2)

= 0.06752200084923
40

This shows that the price elasticity of demand for Metlink train tickets is:

= 0.16880500212308

B) From the figures provided, we can see that as the price of the train ticket rises, the quantity demanded falls. This follows the law of demand meaning that train tickets are a normal good, as opposed to a giffen good that goes against the law of demand. Due to the elastic figure being less than 1 we can draw the conclusion that train tickets are inelastic. This means there is a relatively small change in the quantity demand despite a change n price. This also suggests that Metlink train tickets are a necessity opposed to a luxury.

Question 2
Although previous national studies showed video rentals as being inelastic new evidence from a video store contradicts these results. The manager at the store increased their price expecting a rise in their profit, but in fact the increased price had the opposite effect. This is because although the video rental demand had previously been shown to be inelastic time had past. In the time that had past the ability of the renters to substitute renting video had changed. With new technology it is now easy to download movies thus creating less demand for renting them. Due to new revolutions the demand curve would now become elastic so the demand curve has flattened out. This means because the price has been raised by 20% the demand for video rentals will reduce proving it harder to rent out videos. Revenue will decrease due to lower sales and although being at a higher price it does not match previous years income. This is represented in the following graph:

Question 3
A) i) In the short term, if scientists discovered that eating soybeans prevents cancer and heart disease this would shift the demand curve to the right. As a result the quantity demand rises due to consumers hearing that soybeans are good for your health. This increases the equilibrium price and quantity, because there is no shift in the supply curve so the equilibrium point moves to the right with the demand curve. This is represented in the following graph:

In the long run if scientists discovered that soybeans prevents cancer and heart disease this would shift the demand curve to the right. As a result the suppliers would be more willing to increase supplies because of the money they will receive for the more goods they produce. This shifts the supply curve to the right. The increase in supply decreases the equilibrium price but increases the demand. This is represented in the following graph:

ii) With the increase in the supply in soybeans the space for the feed corn to grow is reduced. Thus there would a shift in the supply curve to the left. This would mean a shift in the equilibrium price would rise. Thus feed corn would be selling for a higher price but the demand would be less. This is represented in the following graph:

B) i) The effect that nylon being invented would have on the domestic cotton industry is that the demand for cotton will decrease, shifting the demand curve to the left. Due to nylon being a substation for cotton. Thus the equilibrium price and supply will decrease. Meaning the sale of cotton will reduce which will in turn force suppliers to decrease the price of cotton. This is represented in the following graph:

ii) The effect the cotton gin being invented would have on the domestic cotton industry is that the supply curve would shift to the right due
Show More

Related Documents: The Price Elasticity Of Demand For Metlink Train Tickets

Essay about ECO2302 SYLLABUS SSI 2015 Online Course COB Format 1

Lake, Rice, SMU, TCU, Baylor, Texas Tech, The University of Texas at Austin, Texas A&M, and our own University of Houston-Downtown. 1. COURSE NUMBER AND TITLE: ECO 2302 Principles of Microeconomics (3-3-0) 2. CATALOG DESCRIPTION: Principles of micro-economics, with major emphasis on price and income distribution theory. Topics include demand theory, competition, oligopoly and monopoly, marginal productivity theory, international trade, and international finance. 3. PREQUISITES: Prerequisite…

Words 2784 - Pages 12

Volunteering In Nonprofit Organizations

their efforts of assisting the needy. These organizations have to continuously invent new ways of ensuring that they progress to get as many volunteers as possible. As a result, there have been emergent trends in volunteerism. One such trend has been micro-volunteering, which is the thesis for this paper. The rates of volunteering continue to be steady. However, the methods that individuals use to volunteer are changing. People are willing to volunteer, but they rarely have the time to spend hours doing…

Words 924 - Pages 4

BOFFI (A): MANAGING INTERNATIONAL IN LUXURY GOODS Essay

Specifically of the external MICRO and MACRO ENVIRONMENT and LIFECYCLE ANALYSIS of prospective new host countries/regions where case organisation might conduct business. No evaluation of data. No critical investigation. Lack of understanding of the basic issues and requirement. Demonstrates very limited ability to identify, interpret, evaluate and categorise key drivers of change in external macro and micro environment. Poor/no presentation of lifecycle…

Words 3362 - Pages 14

Essay on Aol: Crowdsourcing and Mechanical Turk

undertaking, he considered the development of feature distinguishing programming, considered building highlight recognizing programming, as he found that it would take long time to fulfill wander, he picked to part the entire venture into minor assignments and with the support of Amazon's standard crowdsourcing website 'Mechanical Turk' he separated into an enormous online gathering of Workers spread over in 190 countries with an aggregate of 500,000 willing to chip away at the web. Inside couple…

Words 1158 - Pages 5

Rover Mobile Essay

customers switch providers to chase better deals and packages. You’ve heard of other mobile companies using advanced business analytics/ customer intelligence using multiple online/offline data sources to micro-segment their customer base, and to serve these micro-segments with the best marketing offers to increase retention and loyalty. Your research indicates that other mobile service providers, such as Fido, have used advanced analytics to increase its retention by 10%. You’ve…

Words 512 - Pages 3

Essay about DC Workshop 1 Preparation Document V2 05

Page 2 of 30 How does the workshop fit with the module assignments and the assessment process? Each module has a total of 3 assignments that you will submit throughout the term. During the two days you will participate in Skills Practice Assessments that are assessed by the workshop facilitator. The workshop facilitator will be completing two Skills Practice Assessments for you. The Skills Practice Assessments are Part A of Assignment 2 for both Facilitate the Counselling Process and Counselling…

Words 6856 - Pages 28

Stephen Gladney assignment1 Essays

Stephen Gladney March 17, 2015 Unit 1 Assignment: Integrated Circuit Technology 2) Processor Transistor count Date of introduction Manufacturer Intel 4004 2,300 1971 Intel Intel 8008 3,500 1972 Intel Intel 8080 4,500 1974 Intel Intel 8085 6,500 1976 Intel Intel 8086 29,000 1978 Intel Intel 8088 29,000 1979 Intel Intel 80286 134,000 1982 Intel Intel 80186 55,000 1982 Intel Intel 80386 275,000 1985 Intel Intel i960 250,000 1988 Intel Intel 80486 1,180,235 1989 Intel Pentium 3,100,000 1993 Intel Pentium…

Words 425 - Pages 2

Saving On A Small Scale

Khadijah Lisbon March 6th, 2014 Professor Manu ACDV 101 Saving on a Small Scale Micro-savings, used to describe saving loose change. When talking about micro-savings, a lot of people have a hard time saving any amount just because it isn’t thought about. After holding a few discussions, and reading literature, I learned that saving on a small scale isn’t difficult if you take the time to really figure out what’s important. After watching the “Beyond the Classroom Walls” video, I came to realize that…

Words 411 - Pages 2

The Importance Of Criminalistics

12/15/13 Criminalistics Assignment 2 The most significant step in examining a fiber for comparison is performing a microscopic comparison for the color and the diameter of the fiber, by using a comparison microscope. If the color and the diameter are not similar, then the fibers are not a match. Other morphological features that could be present to aid in the comparison are…

Words 739 - Pages 3

Krebs cycle definitions Essay

Med-micro. assignment 5.2 I. Define each of the terms. (Click on the title above to open the assignment area. Copy and paste these terms into the assignment box to add your definitions or you may copy and paste them into a Word file, save your file to your computer and attach the file to this assignment area.) ATP – An important intracellular energy source. Glycolysis – The main pathway for the oxidation of glucose to pyruvic acid; also called Embden-Meyerhof pathway. Citric Acid…

Words 437 - Pages 2