Question: Question 1: [25 marks] A car park operator increases the price of car parking from 4 per day to 5 per day and finds that

Question 1: [25 marks] A car park operator increases the price of car parking from 4 per day to 5 per day and finds that the usage of the car park reduces from 1,000 cars per day to 750 cars per day. a) Calculate the arc price elasticity of demand for this price change and state whether it is elastic, inelastic or unit elastic (10 marks) The car park operator decides to hire a consultancy firm to determine the demand function for the car park. After a period of gathering data and subsequent analysis, the consultancy firm determines that the demand can be approximated by the following equation: P=8-0/250 Where P is the price charged and Q is the number of cars in the car park. b) Calculate the point price elasticity of demand if the car park charges 2 per day. (10 marks) c) Explain any difference in the price elasticities calculated in (a) and (b)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Question 1: [25 marks] A car park operator increases the price of car parking from 4 per day to ES per day and finds that the usage of the car park reduces from 1,000 cars per day to 750 cars per day...

QUESTION 1 (25 marks) - Chapter 4 An engineering student bought a car at a local used car lot. Including tax and insurance, the total price was RM30000. He is to pay for the car in 12 equal monthly...

QUESTION 1 25 MARKS (1) With reference to the reported cases, discuss the precise legal effect of an invitation for tenders. In the course of your answer, explain the legal position where: an invitee...

Total marks: 10 Question 1 (2 marks). What does Chris Barr see as the purpose, or mission, of Banff Aspen Lodge? What is the current issue he is thinking about? Question 2 (4 marks) Conduct a...

Question 1 (75 marks: 100 minutes) : PART A (20 marks: 27 minutes) You are an audit senior who has been assisting with the audit of Harlequin Ltd (Harlequin) for the year ended 31 December 2019. You...

What is the definition of graduated income tax structure, as it applies to the Internal Revenue Code? O A taxpayer with lower taxable income will pay a higher percentage of tax than a taxpayer with...

US$1000 Reward if every question is correct Please do all questions in the attachment. Show all workings and formulas. Please do in Microsoft word. UNIVERSITY OF TECHNOLOGY, JAMAICA COLLEGE: BUSINESS...

Information Management - Assignment 3 (semester 1, 2021/2022) Assessment Weighting: 20% of the course total Total marks: 70 marks Due date: 10th Dec, 2021 . Submission: Must be done individually. YOU...

Hello could you please answer the following questions and give steps as to how you came to these answers and how to solve them for the correct answer, I'm having difficulty with these review...

At December 31, 2010, Risk Company had 500,000 shares of common stock outstanding. Risk sold 50,000 shares on October 1, 2011. Net income for 2011 was $2,417,875. The tax rate was 30%. In addition,...

Prove that lim x0 x2 cos (1/x2) = 0.

Ifferential analysis for sales promotion proposal ole Mates Inc. is planning a one - month campaign for July to promote soles of one of its two shoe products. A total of $ 1 6 4 , 0 0 0 has been...

As the world has been changing over the past two years and the amount of companies that have had to lay off employees then bring them back and then lay them off again due to the pandemic, how has the...

Health insurance coverage is primarily financed through payroll and other taxes.

Even though health insurance is universal, citizens can choose whether or not they are insured.

Even though it is illegal for sickness funds to deny coverage to individuals, insurers still often engage in risk selection.