Unformatted text preview: Instructor: koltltoom alkofalti Assignment: Hw 0116-2
Date:10r"21:"09 Course: Eco 2301-05
The: 12:24 PM Book: Hubbard’O'Brieu: Microeconomics 3: An article in the Wall Street Journal noted the following: Instead of relying on a full - coach,
round - trip unrestricted litre of about $2,000 between Cleveland and Los Angeles ...Continental
[Airlines] since June has offered a $716 unrestricted fare in that market Through October. the
test resulted in about the same revenue that Continental thinks it would have collected with its
higher fare. Source: Scott McCartney. "Airlines Try Cutting Business Fares, Find They Don't Lose Revenue", Wall Street
Journal, November 22. 2002. What is the absolute value of the price elasticity ofdcmand on this airline route?
We. approximately I ' ,' E7, 0 'f 'C. greater than I _ [a lessthanl Income elasticity measures ' : how a good's quantity demanded responds to change in the price ot‘another good.
3’, how a good's quantity demanded responds to change in buyers' incomes.
how a good's quantity demanded responds to producers' incomes. how a good's quantity demanded responds to change in the goods price. |()_ Calculate the income elasticity il‘an 8 percent increase in income leads to a 4 percent increase in
quantity demanded for organic produce. l.5
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- Fall '08
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