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