Price Elasticity of Demand is responsive change in demand, due to change in price. P(Ed) = % change in demand / % change in price.
Demand can be classified on the basis of : Elasticity & its relationship with Total Revenue [ TR = P X Q] ; as undermentioned :-
Elastic Demand : P(Ed) > 1, %change in demand > %change in price, Price & Total Revenue are inversely related [ P ↑ TR ↓ , P ↓TR ↑ ]
Inelastic Demand : P(Ed) < 1, % change in demand < %change in price , Price & Total Revenue are positively related [ P ↑ TR ↑ , P ↓ TR ↓]
As Given : Increase in bus fares (price) lead to increase in total revenue. This implies Price & Total Revenue are directly related. So, Demand for subway bus services is Inelastic.
Discretionary income is an economic concept that refers to money left over after an individual pays taxes covers living expenses. Discretionary income typically falls and increases following the overall health of the economy. Discretionary income allows people to purchase luxury items, or nonessential goods and services.
Therefore, <em>after her wage rise, Ginny Paulson's discretionary income could contemplate the purchase of a smart TV.</em>
This question of course seeks to expand on the problem.
A problem question usually focuses on tackling a real problem, and evoking empathy from the inquirer.
The goal of solving this real problem facing many today is to increase people's productivity.
Problem based questions evokes emotional responses because it makes the Inquirer think about how the problem affects other people, not just themselves.