Econs
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a) I know.
b) I want to ask about b. How should I go about talking about the effects? -
You should talk about whether "quantity demanded" for those 4 trip types will decrease when your out of pocket expenses decrease. Need to make reference as to why it happens, means make reference to elasticity coefficients, and how it affects demand
Not sure if I used the terms correctly
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An elasticity value that's >1 will mean that for every drop in spend power, there will be a more than proportionate drop in quantity demanded (not demand!) of the good/service in question.
The reverse is true for an elasticity value <1.
That's what the question is looking for, but you must input your own values and calculate the effects to prove the above statement.
Add-on: If you want to score more, you can add to your answer the overall effect on your spending pattern on all 4 types. ;)
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ty.
Got another question:
Don't understand what a) is asking for...
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You slowly work out the MC and MR, short run MC = MR, long run Price = AC.
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Nice graph.
It will be better if the TR curve is added since
equlibrium output occurs where TR - TC is the greatest ie maximum total profit and
where MC curve cuts MR curve from below.
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omg can someone explain to me the question and answers? i totally catch no balls