60.1K

Verified Solution

Link Copied!

Price Elasticity of Demand The transit service from downtown to a theme park is currently served by regular bus and a express bus. Five thousand passengers per day use the regular bus and 7,000 use the express bus. Travel times (min) and fares ($) are: Travel time (min) Fare S) Regular 45 Express 30 2 1 The linear arc-time and arc-price elasticities of demand are: Regular Time Fare Regular -0.03 -0.04 Express +0.05 +0.02 Time +0.02 -0.07 Express Fare +0.05 -0.20 (11) Calculate the demand on the regular bus service as a result of raising the express bus fare to $2.50 (a) 6696 (b) 4982 (C) 5056 (d) 5605 (e) 5560 (12) Calculate the change in total revenue of the transit service as a result of the decision in (11) (a) 56 (b) 2795 (c) 180 (d) 4982 (e) 2740 (13) If the travel time on the express bus is reduced to 25 min, calculate the demand on the regular bus (a) 5970 (b) 4982 (c) 4850 (d) 7037 (e) 3612 (14) Calculate the change in total revenue of the transit service as a result of the decision in (13) (a) 180 (b) 161 (c) 2740 (d) 56 (e) 18 (15) If the regular bus increases their travel time to 50 min, what will be the net effect on the transit service ridership? (a) 21 (b)-18 (c) 55 (d) -37 (e) 56 Price Elasticity of Demand The transit service from downtown to a theme park is currently served by regular bus and a express bus. Five thousand passengers per day use the regular bus and 7,000 use the express bus. Travel times (min) and fares ($) are: Travel time (min) Fare S) Regular 45 Express 30 2 1 The linear arc-time and arc-price elasticities of demand are: Regular Time Fare Regular -0.03 -0.04 Express +0.05 +0.02 Time +0.02 -0.07 Express Fare +0.05 -0.20 (11) Calculate the demand on the regular bus service as a result of raising the express bus fare to $2.50 (a) 6696 (b) 4982 (C) 5056 (d) 5605 (e) 5560 (12) Calculate the change in total revenue of the transit service as a result of the decision in (11) (a) 56 (b) 2795 (c) 180 (d) 4982 (e) 2740 (13) If the travel time on the express bus is reduced to 25 min, calculate the demand on the regular bus (a) 5970 (b) 4982 (c) 4850 (d) 7037 (e) 3612 (14) Calculate the change in total revenue of the transit service as a result of the decision in (13) (a) 180 (b) 161 (c) 2740 (d) 56 (e) 18 (15) If the regular bus increases their travel time to 50 min, what will be the net effect on the transit service ridership? (a) 21 (b)-18 (c) 55 (d) -37 (e) 56

Answer & Explanation Solved by verified expert

See Answer