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Elasticity

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Question 12

A transport operator analyses the demand for its premium coach service and finds the following relationships:

  • A 12% fall in the price of rail tickets leads to an 18% fall in the quantity demanded of premium coach journeys.
  • A 5% rise in average household income leads to an 8% fall in the quantity demanded of premium coach journeys.

Based on these findings, how are premium coach journeys classified in relation to rail tickets, and what type of good are they with respect to income?

Complements and normal goods

Substitutes and normal goods

Complements and inferior goods

Substitutes and inferior goods

Elasticity Questions

  1. A Level
  2. /Economics
  3. /Elasticity