F4 ECON (PRICE ELASTICITY OF DEMAND AND SUPPLY)
2)under which condition will the taxi driver's revenue rise after the taxi fare cut?
- ALv 51 十年前最愛解答
the demand for taxi is highly elastic.
An increase in taxi fare would highly influence the demand for taxi - the demand for taxi would drop. On the other hand, the demand for mtr is inelastic when compare to the demand for taxi, as if the mtr fare increase, the demand for bus would have minimal change.
2006-11-13 23:01:15 補充：
2) Conditions: (while holding all other factors are unchange) e.g. petrol, taxi rent, tunnel fees are the same)Whether the demand for taxi has increase dramatically. If there is no huge difference in demand for taxi, then there would not be much change in revenue.資料來源： my knowledge
- Tarot SelinaLv 41 十年前
Taxi is elastic. It is because beside taxi, there are many substitutes. If there are more substitutes, then the demand will be more elastic.
If the demand is elastic, i.e. elasticity > 1, then when the price is decreased, the total revenue will be increased. It is becuase the change in quantities is greater than the change in price. Therefore, if the demand is inelastic, i.e. elasticity < 1, then when the price is decreased, the total revenue will be decreased. It is because the change in quantities is smaller than the change in price.