MBAF-504: Economics from a Business Perspective
Assignment #1: Demand and Supply, elasticity
Due: 28 January 2019 at 10:00pm
Length: not more than the maximum words limit provided for each question.
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Do not include the questions in the document you submit to Turniton. Write the number of the question
only.
1. Border Crossings into B.C. Up 15 Percent
Cheap gasoline brought 964,000 American visitors through border crossings in
B.C. during the first four months of 2016, a 15 percent increase from the previous
year.
Source: Vancouver Sun, July 9, 2016
The U.S. energy Information Administration reports the average price of gasoline
was $2.83 a gallon in July 2015 and $2.22 a gallon in July 2016.
a. List and explain the elasticities of demand that are implicitly referred to in the
news clip.
(Maximum 40 words)
b. Estimate a price elasticity of demand for B.C. border crossings.
(Maximum 140 words)
Use this information to answer question #2.
Ride-Hailing Could Lead to More Road Congestion
An American study says ride-hailing companies Uber and Lyft, now arriving in Canada,
bolster public transit by extending its reach from the first to the last mile. Another view
is that they undermine public transit by providing a lower-cost service that worsens
congestion.
Source: Vancouver Sun, March 10, 2017
2.
Are Uber rides and transit rides complements or substitutes? Explain your answer.
(Maximum 70 words)
3.
What is the effect on the price and quantity of smartphones if the price of a musicstreaming subscription falls or the price of a wireless plan rises? (Draw the
diagrams!)
(Maximum 90 words)
4.
Saudi Arabia Oil Revenues Shrink
As the price of oil fell from $99 a barrel in September 2014 to $53 a barrel by
September 2015, Saudi Arabia’s oil revenues fell by 23 percent, compared with its
2014 oil revenues of 444.5 billion riyals.
Source: News.markets, December 29, 2015
a. How can you use the information in the news clip to determine whether the
demand for Saudi Arabian oil is elastic or inelastic?
(Maximum 60 words)
b. How can you use the information in the news clip to estimate the magnitude of the
price elasticity of demand for Saudi Arabian oil?
(Maximum 110 words)
c. Does the news article tell us whether the supply of Saudi Arabian oil is elastic or
inelastic? Explain.
(Maximum 100 words)