Question:

In Pioneer Ville, the price elasticity of demand for bus rides is -0.5, the income elasticity of demand for bus rides is -0.1, and the cross-price elasticity of demand for bus rides with respect to gasoline is -0.2.

1. Is the demand for bus rides elastic or inelastic with respect to the price of a bus ride? Why?
2. Would an increase in bus fares increase the bus company's total revenue? Explain.
3. Describe the relationship between bus rides and gasoline. Explain?
4. If the price of gasoline increases by 10 percent with no change in the price of a bus ride, how will the number of bus rides change?
5. If income in Pioneer Ville increase by 5 percent with no change in the price of a bus ride, how will the number of bus rides change?
6. In Pioneer Ville, is a bus ride a normal good or an inferior good? Why?
7. In Pioneer Ville, are bus rides and gasoline substitutes or complements? Why

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