2. The transport authority of the city corporation areas has experimented with the fare structure for the city’s public bus system after the Covid-19 pandemic. The new system is fixed fare system in which a passenger may travel between two points in the city for the same fare. From the survey results, system analysis has determined an appropriate demand function, q=400− p 2 where Q equals to the average number of riders per hours and p equals the fare in taka a. Find the elasticity of demand when the fare is BDT 5 and when the fare is BDT 15. b. What impact does it have in the elasticity and on the revenue for the fare increase? Will the price increase help the transport authority to increase its revenue? c. Determine the fare which should be charged to maximize hourly bus for revenue. (Use graph) d. How many riders are expected per hour under this fare? e. What is the expected maximum annual revenue?
2. The transport authority of the city corporation areas has experimented with the fare structure for the city’s public bus system after the Covid-19 pandemic. The new system is fixed fare system in which a passenger may travel between two points in the city for the same fare. From the survey results, system analysis has determined an appropriate demand function, q=400− p 2 where Q equals to the average number of riders per hours and p equals the fare in taka a. Find the elasticity of demand when the fare is BDT 5 and when the fare is BDT 15. b. What impact does it have in the elasticity and on the revenue for the fare increase? Will the price increase help the transport authority to increase its revenue? c. Determine the fare which should be charged to maximize hourly bus for revenue. (Use graph) d. How many riders are expected per hour under this fare? e. What is the expected maximum annual revenue?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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2. The transport authority of the city corporation areas has experimented with the fare
structure for the city’s public bus system after the Covid-19 pandemic. The new system is fixed
fare system in which a passenger may travel between two points in the city for the same fare.
From the survey results, system analysis has determined an appropriate demand function,
q=400− p
2
where Q equals to the average number of riders per hours and p equals the fare in taka
a. Find the elasticity of demand when the fare is BDT 5 and when the fare is BDT 15.
b. What impact does it have in the elasticity and on the revenue for the fare increase? Will
the price increase help the transport authority to increase its revenue?
c. Determine the fare which should be charged to maximize hourly bus for revenue. (Use
graph)
d. How many riders are expected per hour under this fare?
e. What is the expected maximum annual revenue?
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