Kitchen Appliances

This week is ridiculously hectic at uni , working 40 hours a week + 20 hours contact time + homework is driving me insane. I need help this week yahoo economic scholars.

Thank you.

1— Business people usually travel on expense accounts that are tax deductible and they earn a “return” by traveling because they usually do so to promote their businesses in one way or another. These facts, amongst others, seem to suggest that the demand for business class seats should be more price inelastic then the demand for economy class tickets, which suggests that business class fares are located higher up the demand curve where demand is actually more price elastic rather than inelastic. Explain this apparent conundrum by discussing the nature of the market (s) for air travel.

2—- Each Monday a restaurant runs a lunch special on vegetarian laksa. On other days of the week it sells about 250 serves at a price of $7 each during the lunchtime rush. On Mondays, the restaurant lowers its price to $5 and demand proves to be price inelastic (i.e. Ped is less than 1.0). The chef argues that even 250 serves stretches the kitchen beyond its production capacity. She argues that a price rise would ease the pressure on the kitchen and would leave the restaurant better off. Use your understanding of elasticity and revenue to critically examine the chef’s position.

3— Joe and Bruce sit outside a bar on budget night. Joe eyes his pack of cigarettes with dismay. “Those darn politicians announced another tax on us poor smokers today,” he says. Bruce nods with empathy, fingers his smokes and then whines, “They try to tell us that they do it to reduce the number of cigarettes sold in the market. It’s just another way for the government to levy more taxes. They should tax the cigarette companies and leave us poor smokers alone.”

4—
(a)Use your understanding of economic theory to analyse how a tax could reduce the number of cigarettes sold in the market.
(b) Do you suppose that the demand for cigarettes is price elastic or price inelastic. What the supply of cigarettes. P.T.O
(c)If your guess about price elasticities is right, then will the burden of the new sales tax be borne by suppliers or more by consumers.

5—-
Distinguish between explicit and implicit costs, giving examples of each

- What is the importance of the difference between explicit and implicit costs to the calculation of economic and accounting profits. Explain this carefully

6–

Classify the following as fixed or variable costs

A-Advertising Expenditues
B-Fuel Costs
C-Interest on company issued bonds
D-Shipping costs
E-Payments for raw materials
F-Real estate taxes
G-Executive salaries
H-Insurance Premiums
I-Wage payments
J-Depreciation Charges
K-Sales taxes
L-Rental payments on leased office machinery

7–

Read the article entitled “Train fare cut trebles passengers” and explain in your own words the relationship between total revenue and elasticity. Use a model to assist your explanation and conclude with a comment as to why the price reduction has been a sensible strategy for Great Southern Railways.

A heavily slashed coach-class rail fare between Adelaide and Sydney has produced a 320 % leap in passengers.
The unprecedented popularity of the $89 one-way fare over the past four months has led Great Southern Railway to extend it until March 31.
The offer was to have ended next Tuesday and compares with the previous fare of $176 one-way in either direction.
“we anticipated the $89 fare would prove extremely popular with interstate travelers, but the response has exceeded our expectations, GSR chief executive Stephe Bradford said yesterday.
Given this response it was an easy decision to extend the offer through to March 31.
It means the low fare will continue for the peak demand period of December-January. Coach class has recliner seats and passengers can take a shower on board, walk around the carriage and watch a movie’ The Indian pacific leaves Adelaide at 7.45am on Wednesdays and Sundays, arriving in Sydney at 9.15am the following day. The ghan leaves Adelaide at 10.10am on Saturdays and arrives in Sydney at 9.15am on Sundays. The 89 price is for adults, students and children, pensioners pay $79.