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    Microeconomics

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    Economists have estimated the following transportation elasticities. For each pair, explain possible reasons why the elasticities differ. a. elasticity of demand for buses is 0.23 during peak hours and 0.42 during off-peak hours b. elasticity of demand for buses is 0.7 in the short run and 1.5 in the long run c. elasticity or demand for toll roads is 4.7 for low-income commuters and 0.63 for high-income commuters.

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    (1) Peak hours have a higher volume of traffic consisting of workers who must get to work - even if it costs them more.
    This means, a slight increase in price is not going to reduce the demand for the transportaion a lot. Therefore, the demand
    elasticity is low.On the other hand, the off-peak ...

    Solution Summary

    A Complete, Neat and Step-by-step Solution is provided with regards to transportation elasticity within the context of microeconomics.

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