Sun City's public bus line has been operating at a deficit. The city decides to raise the fare from 50 cents to 75 cents, anticipating enough additional revenue to cover the deficit. What assumption is the city making about price elasticity?
200. What are the main determinants of demand elasticity? Explain their importance.
201. How might a court use cross elasticity in an antitrust case?
202. How might a market research analyst use measures of elasticity-price, cross, and income-in her work? Explain.
203. How can one tell from cross elasticity what kind of relationship exists between any two goods?
204. The cross elasticity between two goods has been measured at −1.2. How are the goods related? Explain. Give an example of goods for which this might be a reasonable measure of cross elasticity.
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