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1. What effect, if any, does each of the following events have on the price elasticity...

1. What effect, if any, does each of the following events have on the price elasticity of demand for corporate-owned jets?  

  1. The virtual reality technology becomes more inexpensive and popular in business online conferences.
  2. Reduced corporate earnings lead to cuts in travel budgets and increase the share of expenditures on corporate jet travel.

2. 3-D movies have been popular and charged at a higher price, compared with the traditional 2-D movies. Please analyze the impact of 3-D movies (in the language of economics) on

  1. The price elasticity of demand for 2-D movies
  2. The total revenue of movie theatre box offices
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Answer #1

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Event: The virtual reality technology becomes more inexpensive and popular in business online conferences.

Result: In this case, the price elasticity of demand for corporate-owned jets will increase. Since corporates now have an alternative to owning private jets, the demand for corporate jobs would be more price elastic.

Event: Reduced corporate earnings lead to cuts in travel budgets and increase the share of expenditures on corporate jet travel.

Result: In this case also, the price elasticity of demand for corporate-owned jets will increase. When the share of expenditure on a good increase, its demand becomes more elastic.

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