question archive Suppose your elasticity of demand for your parking lot spaces is , and price is per day
Suppose your elasticity of demand for your parking lot spaces is , and price is per day
Subject:EconomicsPrice:2.88 Bought3
Suppose your elasticity of demand for your parking lot spaces is , and price is per day. If your MC is zero, and your lot is full at 9 A.M. over the last month, are you optimizing?
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The pricing rule is:
LHS = 1
RHS = -1/2
Since, LHS does not equal RHS, capacity is not fully utilized. Since the demand is elastic, the price of parking lot space should be lowered to increase its demand.
