Question

One day su 100 del Price in Passes sold Passes sold Type of Price in Total Total 2010 2011 in 2010 in Revenue Revenue 2011 2010 2011 $22 32,000 1999 $152.000 $439,758 200 15000 Annual 9500 $1,500,000 $1,900,000 1. You have been assigned by the mayor to rise the rent on park district courses in order to generate more revenue. The tennis courts are located in an area where real estate serves at a premium and there is always activity on the court. Here is some data after you implemented the new pricing scheme. In the data below can you discern if demand is elastic or inelastic between 2010 and 2011. 2. In the Movie Slumdog Millionaire one the main characters lives in a rent controlled area in Mumbai which has rent controls since 1947. In rent-controlled markets what happens to demand and supply. 3. Illegal markets may come to live when there is a of goods and services and consequently, what other factors come into play to determine who gets what? 4. You are a student in a statistics course, you're really not into the class, you come in late, text during class and have sidebar conversations. You also work and generate wages sufficient enough to allow you to live a desirable part of town and your job may offer advancement without benefit of much education. Is the opportunity cost for you attending school high or low, explain your answer? 5. Answer Yes or No to the following statement." It's true that it's false that a change in price will cause the demand curve to shift to the left." 6. Adam Smith, J.B Says and Milton Friedman would agree to the equation that ceteris paribus Quantity Demanded = Quantity Supplied and that any surplus or shortage will be adjusted for by both consumer and firms. 7. For each scenario how will the demand or supply curve behave:

Answer 1

Answer 1) We have to see whether the demand is elastic or inelastic between 2010 and 2011. For this,we have to calculate "Price Elasticity of Demand".

If the Price Elasticity of Demand (e) is less than 1 (<1), then the demand is inelastic.

If more than one (>1), then the demand is elastic.

We have been provided the annual figures for prices and quantity of passes sold in 2010 and 2011 respectively, which is as follows-

2010

Price (P1)= $100

Passes sold (Q1)= 15000

2011

Price (P2) = $200

Passes sold (Q2)= 9500

In order to calculate price elasticity, the following formula will be used-

---------(1)

3Q

where,

-------------(2)

Q - 02-01

and,

-------------(3)

SP= P2 - P1 P1

Putting the values in (2) and (3), we get-

9500 – 15000 SQ= -= -0.37 15000

SP= 200 – 100 - 100 = 1

Putting these values in (1), we get-

e = -0.37 -= -0.37

We get e=-0.37, which is less than 1. Therefore the demand was inelastic between 2010 and 2011.