The Concept of Price Elasticity of Demand Essay - 1

The Concept of Price Elasticity of Demand - Essay Example The sign of price elasticity is more frequently than not â€Å"negative although analysts tend to ignore the sign as it can lead to ambiguity†. However, the positive price elasticity of demand can be achieved for Giffen goods or goods that â€Å"do not conform to the Law of Demand†. A less than one value of price elasticity of demand value implies inelasticity of a good i.e. change in the price conditions seems to have a small effect on the quantity demanded of that good (Marquez, 2002, p. 22). The demand for a good is said to be elastic when the value of price elasticity is greater than one which small changes in the price level will have significant effects on the quantity demanded of that good. Revenue can be â€Å"maximized when the value of price elasticity of demand is equal to one†. The formula for the price elasticity of demand is provided below:   The term income elasticity of demand is used to define the change in demand conditions due to change in income of the consumers in an economy keeping other conditions as constant. A negative value of the income elasticity can be achieved in case of inferior goods where a rise in income of the consumers will lead to falling in demand for that good. A positive value of price elasticity of demand can be achieved in case of â€Å"normal goods where an increase in income will lead to rising in demand† conditions for that good whereas if the value of income elasticity of a good is less than one implies the good is a necessity good (Flynn and Antonioni, 2011, p. 124). Again â€Å"if the elasticity is greater than one then the good can be categorized as the luxury or superior good†.

Transportation policies Research Paper Example | Topics and Well Written Essays - 1750 words

Transportation policies - Research Paper Example This article looks at the lessons that the US can learn from the public transport in Germany and the impacts it has contributed. In Germany and other industrialized nations in the world, public transport has increasingly been replaced by personal means of transport. The majority of the people in these countries do not use public transport. In the rural areas of this country, the majority of the rural dwellers suffer greatly from the unavailability or the total lack of public transport systems. This leads them to adapt to using the exclusive private systems of transport. This mainly involves the use of cars and vans for individual or family use. The public survey conducted in Germany in 2008 reported that 44% of the entire Germany population has never used public transport systems. This means that the entire German public transport system is mostly characterized by total to partial absence of people on public transport (Rietveld and Stough 5). According to research, the average Americ ans travel by cars twice as much than their German counterparts. They use transit six times less than the average Americans do. The results of these differences in statistics are due to income or residential density. The average Germans in the upper class make lower number of trips in their cars than Americans in the lower income class. Moreover, Germans who live in low-density areas travel by car about six times less than the Americans living at population densities areas do.