question archive What effect, if any, does each of the following events have on the price elasticity of demand for corporate-owned jets? a) A decline in corporate earnings causes firms to cut their travel budgets, which in turn causes expenditures on corporate jet travel to become a larger fraction of total spending on corporate travel
What effect, if any, does each of the following events have on the price elasticity of demand for corporate-owned jets? a) A decline in corporate earnings causes firms to cut their travel budgets, which in turn causes expenditures on corporate jet travel to become a larger fraction of total spending on corporate travel
Subject:EconomicsPrice:2.88 Bought3
What effect, if any, does each of the following events have on the price elasticity of demand for corporate-owned jets?
a) A decline in corporate earnings causes firms to cut their travel budgets, which in turn causes expenditures on corporate jet travel to become a larger fraction of total spending on corporate travel.
b) A new, much more fuel-efficient corporate jet is introduced.
c) Further deregulation of the commercial airlines industry substantially increases the variety of departure times and destinations offered by commercial airlines.
d) The cost of manufacturing corporate jets rises.
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(a)
A decline in corporate earnings causes firms to cut their travel budgets, but the fraction of expenditure on corporate jet travel became a larger fraction of total spending. This means that corporate jet travel was not reduced as compared to others. Assuming that the corporate jet travel remain the same, the price elasticity of demand would remain the same.
(b)
A much more efficient corporate jet would reduce the fare price and there would be a increase in demand, thus the price elasticity of demand would increase.
(c)
Variety of departure times and destination offered by commercial lines would means that the demand of corporate jet travel would decrease as the alternatives have increased, thus the price elasticity of demand would decrease.
(d)
The cost of manufacturing jets would increase the fare price of travel and the price elasticity of demand would decrease.
