public transportation authority must take steps to eliminate its pricing deficit .
a ) What pricing policy should the transportation authorty adopt ? Why ? ( b )
b ) What price per ride must the public transportation authority charge to eliminate the deficit if it cannot reduce costs ?
Problem 9 : A researcher estimated that the price elasticity of demand for automobiles in the United States is -1.2 , while the income elasticity of demand is 3.0 . Next year , U . S . auto makers intent to increase the average price of automobiles by 5 percent , and they expect consumers ’ disposable income to rise by 3 percent .
a ) If sales of domestically produced automobiles do expect U . S auto makers to sell next year ?
b ) By how much should domestic auto makers increase sales by 5 percent next year ?
Problem 14 : Suppose that a firm maximizes its total profits and has a marginal cost of production of $ 8 and price elasticity of ( - ) 3 . Find the price at which the firm sells the product .
Problem15 .
The research department of the Corn Flakes Corporation CFC estimated the following regression for the demand of the cornflakes it sells :
QX = 1.0 - 2.0P X + 1.5I + 0.8P Y - 3.0P M + 1.0A
Where QX = sales of CFC cornflakes , in millions of 10- ounce boxes per year
P X = the price of CFC cornflakes , in dollars per 10- ounce box I = personal disposable income , in trillions of dollars per year