Cross-price elasticity Essay Example | Topics and Well Written Essays - 3000 words

Cross-price elasticity - Essay ExampleSimilarly if the two goods are complements, we should see a price rise in one good cause the demand for both goods to fall.-Cross-price elasticity of demand (CPEoD) for car trigger with respect to passenger car fares is in truth low and is equal to 0.010, but 0.010 so there is no relationship between them. Its clear. If the car last cost amazes, the passel fare will grow too. Thats why there will not be the greater demand for this strain of transport.c) How would you interpret the cross-time elasticity of demand for car travel with respect to jitney in-vehicle travel, why is it positive, and why is the elasticity higher for peak time compared to off-peak times Does it surprise you that the responsiveness of the demand for car travel is greater with respect to pot in-vehicle time than to bus fares Explain your answer.The elasticity is higher for peak times compared to off-peak times, because during the peak hours the busses move bumper-t o-bumper than during off-peak hours and the consumer is keener to switch to a car when the bus is locomote slower than when it is moving faster.d) Are bicycle and bus travel likely to be substitutes or complements What would be the effect on demand for urban bus travel of construction of new bike paths to aboriginal city areas What elasticity measures might be relevant when trying to measure the responsiveness of demand for bus travel to changes in these... c) How would you interpret the cross-time elasticity of demand for car travel with respect to bus in-vehicle travel, why is it positive, and why is the elasticity higher for peak times compared to off-peak times Does it surprise you that the responsiveness of the demand for car travel is greater with respect to bus in-vehicle time than to bus fares Explain your answer. -Bus in-vehicle time increase of 1% during peak hours causes car demand to increase by 0.4% and bus in-vehicle time increase of 1% during off-peak hours causes c ar demand to increase by 0.3%.It is positive, because the consumer is tempted to switch to a car since the bus is slower.The elasticity is higher for peak times compared to off-peak times, because during the peak hours the busses move slower than during off-peak hours and the consumer is keener to switch to a car when the bus is moving slower than when it is moving faster.d) Are bicycle and bus travel likely to be substitutes or complements What would be the effect on demand for urban bus travel of construction of new bike paths to central city areas What elasticity measures might be relevant when trying to measure the responsiveness of demand for bus travel to changes in these conditions for cyclists -Speaking about cross-price elasticity, bus and bicycle are substitutes theoretically. Thats because bus fare rise will entail demand for alternative transport vehicles. But great deal lots of people change bus trip to bicycle one This effect is possible only after construction of new bike paths to central city areas. After changes in these conditions for cyclists, the demand for bus travel can decrease significantly.We have another situation with cross-time elasticity. Bicycle is a slower kind of