The Oresund Bridge Essay Example | Topics and Well Written Essays - 1000 words

The Oresund bridge over - Essay ExampleIn this case, people or basically the target audience of this bridge has the choice of the ferry available. A rise in the prices exit lower the pick up for the bridge by a larger symmetry as people will prefer to give-up the ghost by ferry. Similarly, a stock in price will increase the ask by a larger ratio because much people would be able to afford it now. The second factor is that people like to travel from Denmark to Sweden, or vice versa, but they do not need it. Therefore people will only travel if the price is right, which is to say low. Whenever the price decreases, more people can afford it and this results in price elasticity.Q2) The Swedish political relation has estimated the price elasticity to be at -1.4. This has several consequences for the traffic on the bridge. The Swedish government knows that first of all, an inverse relationship exists. This promoter that a decrease in price will unimpeachably increase the demand and this can help the government in properly pricing it. The second implication is that any qualify in price will fall in 1.4 times the change on the demand. This delegacy that for the government, it is beneficial to decrease the price to increase the demand. For example, if the government reduces the price by 10%, thence it will result in a 14% increase in demand. Therefore, this information can be utile in pricing the tickets for the bridge. Q3) This calculation of price elasticity of -1.4 is not beneficial in the long transmit because first of all, price elasticity tends to change overtime. Secondly, the government is thinking of changing the price and there is of all time different price elasticity for every price level. Therefore if the price changes in the near future, then the price elasticity will change instantly. Lastly, advertisement campaigns play a huge role in changing the price elasticity, thus calculation is not useful in the long run. Case theatre of operatio ns 3.3 The Texas state bird Q1) PED= % Change in demand % Change in price Burbank-Oakland route PED= 120.68% =- 2.51 48% Kansas City-St. Louis route PED= 50.0% = 0.714 70.0% Q2) The above calculated price elasticity applies for the entire industry operating these routes. It does not specifically represent the price elasticity of Southwest Airlines because the values considered for the calculation are for the entire industry. This includes Southwest as well as its competitors. Q3) The Burbank-Oakland route has a high price elasticity of demand which means that the demand is price sensitive. The implication for the price setters is that these airlines should reduce the price of this route a little bit because this increases the demand by a great deal and increases the profitability. On the other hand, it must be kept in mind that the demand will decrease rapidly if the price of this route increases even by a little bit. If the price increases, then it will lower the demand by a large ratio and this will reduce the profits earned. Therefore this high price elasticity of demand can have very crucial implications for Southwest. (AmosWEB) Q4) Although the Kansas City-St. Louis route shows positive price elasticity, it may still prove to be paying for Southwest to reduce their price. When a company reduces their prices or fares their market share increases and this often results in a long term profit. When Southwest will have a greater market share, they can change the prices according to their strategy. Also, although the price elasticity is positive, it is not at a high level and thus with child(p) the prices and making small short term losses is not a bad deal if it means increasing market share. Case study 5.1 Microsoft increasing or diminishing returns? Q1) It is unlikely that a blind drunk is experiencing increasing and diminishing return