Transport Demands and Elasticities How Prices and Other Factors Affect Travel Behavior 12 March 2013 Todd Litman Victoria Transport Policy Institute Abstract Transport demand refers to the amount and type of travel that people would choose under specific conditions. This report describes concepts related to transport demand‚ investigates the influence that factors such as prices and service quality have on travel activity‚ and how these impacts can be measured using elasticity values. It summarizes
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ELASTICITY It shows the degree of responsiveness of the change in the one variable due to the change in the quantity of the other variable. Elasticity = Percentage change in the one variable Percentage change in the other variable It is simply a way of quantifying cause of and effect relationship. The concept of elasticity can be used in demand and supply. ELASTICITY OF DEMAND We can study the elasticity of demand under the following categories. Price elasticity
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HOMEWORK ONE 1. What is the numerical value for the elasticity of demand if a price change causes no change in quantity demanded? . What is the numerical value for elasticity of demand if a price change causes no change in total revenue? . What is the elasticity of demand for a vertical demand curve? . What is the elasticity of demand for a horizontal demand curve? . What is the elasticity of demand if a price increase leads to an increase in total
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Question 1‚ part (a) What is elasticity? The term elasticity is defined as a way to measure how responsive doe’s quantity demanded or quantity demanded towards its determinants (Mankiw‚ 2008). In this world today‚ every government need revenue or income in order to increase the welfare of citizens and improve the country itself. One of the ways that government use in order to increase their revenue is by taxation. To do so‚ government needs to impose taxes on goods and services. If tax is imposed
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9 – Elasticity and Demand Demand and Elasticity Elasticity is a way to measure the responsiveness of a dependent variable to changes in an independent variable. Elasticity is defined as a ratio of the percentage change in a dependent variable to a percentage change in an independent variable. Elasticity ≡ percentage change of dependent variable Percentage change of independent variable When: Y = f(X) %ΔY E ≡ %ΔX Fal l ’05 © Reynolds 2005 Microeconomics Slide 1 Chapter 9 – Elasticity and Demand
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IN THIS CHAPTER YOU WILL . . . Learn the meaning of the elasticity of demand Examine what determines the elasticity of demand Learn the meaning of the elasticity of supply ELASTICITY ITS AND A P P L I C AT I O N Imagine yourself as a Kansas wheat farmer. Because you earn all your income from selling wheat‚ you devote much effort to making your land as productive as it can be. You monitor weather and soil conditions‚ check your fields for pests and disease‚ and study the latest
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creates shortage or surplus. Price Ceiling – A maximum price at which a good can be sold. Price Floor – Minimum price buyers are required to pay for a good. Elasticity The price elasticity of demand is computed as the percentage change in quantity demanded divided by the percentage change in price. That is‚ Price elasticity of demand=ED= Percentage change in quantity demand Percentage change in price Where: %▲D > %▲P (1) = Elastic demand %▲D < %▲P (1) = Inelastic Demand
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Phuong Nguyen Cheryl Thompson BBB4M0 June‚ 10‚ 2012 Diamonds There are many different kinds of valuable gem in the world; however‚ diamonds is the most precious and favorite stone all the time. As the hardest known naturally material‚ diamond can be used to polish‚ cut and become a jewelery. Consumer claim that diamond is forever‚ that’s why diamond wedding ring represent for the endless love. This is a reason why diamond always become a “hot topic” in the market all over the world.
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“A diamond‚ is the symbol for love‚ commitment‚ and a joyful new beginning‚” said the TV commercial. Many of the world’s diamonds‚ are mined using practices that exploit workers‚ children‚ and communities. A million diamond diggers in Africa earn less than a dollar a day. Miners are dying in accidents‚ child labor is widespread‚ and corrupt leaders are depriving mining communities of funds badly needed for economic development. In extreme cases‚ diamond mining can cause entire ecosystems to
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Diamond cut Diamond A merchant‚ after many years of poverty and hard work‚ moved to a distant region and grew rich. He decided to go home. A man told him that his road was beset by thieves‚ and the merchant left his box of jewels with him until he could get men of his own family to accompany him. When he returned‚ the man denied that it had ever happened‚ and threw him out of the shop. Koosby Ram saw him sitting on the road‚ and asked him what had happened. Then he told him to go back the next
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