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A market segment consists of 500 individuals. A Logit mode choice model (with logit parameter equal to 1) has been estimated for this market resulting in the following utility function: U = ẞm 0.40C 0.037 where C is out-of-pocket cost in $ and T is travel time in min. Values of ẞm are: Bus: 0.00; Rail: 0.50; Car: 1.50. For a particular origin-destination pair, the cost of a car trip is $2 and the duration 8 minutes, a rail trip is $1.50 and takes 12 minutes, while a bus takes 20 minutes and costs $1.25. a. Predict the number of trips for each mode. b. Which one of the following policies would lead to the largest increase in bus passengers? Why? (i) An increase in the price of gas that increases the cost of a car trip to $3, while all other parameters remain constant. (ii) Introducing an express service that decreases the travel time of the rail to 10 min, while all other parameters remain constant. (iii) Decrease the cost of the bus to $1, while all other parameters remain constant.

A market segment consists of 500 individuals. A Logit mode choice model (with logit parameter equal to 1) has been estimated for this market resulting in the following utility function: U = ẞm 0.40C 0.037 where C is out-of-pocket cost in $ and T is travel time in min. Values of ẞm are: Bus: 0.00; Rail: 0.50; Car: 1.50. For a particular origin-destination pair, the cost of a car trip is $2 and the duration 8 minutes, a rail trip is $1.50 and takes 12 minutes, while a bus takes 20 minutes and costs $1.25. a. Predict the number of trips for each mode. b. Which one of the following policies would lead to the largest increase in bus passengers? Why? (i) An increase in the price of gas that increases the cost of a car trip to $3, while all other parameters remain constant. (ii) Introducing an express service that decreases the travel time of the rail to 10 min, while all other parameters remain constant. (iii) Decrease the cost of the bus to $1, while all other parameters remain constant.

Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
5th Edition
ISBN:9781305084766
Author:Saeed Moaveni
Publisher:Saeed Moaveni
Chapter20: Engineering Economics
Section: Chapter Questions
Problem 32P
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A market segment consists of 500 individuals. A Logit mode choice model (with logit parameter equal to 1) has been estimated for this market resulting in the following utility function: U = ẞm 0.40C 0.037 where C is out-of-pocket cost in $ and T is travel time in min. Values of ẞm are: Bus: 0.00; Rail: 0.50; Car: 1.50. For a particular origin-destination pair, the cost of a car trip is $2 and the duration 8 minutes, a rail trip is $1.50 and takes 12 minutes, while a bus takes 20 minutes and costs $1.25. a. Predict the number of trips for each mode. b. Which one of the following policies would lead to the largest increase in bus passengers? Why? (i) An increase in the price of gas that increases the cost of a car trip to $3, while all other parameters remain constant. (ii) Introducing an express service that decreases the travel time of the rail to 10 min, while all other parameters remain constant. (iii) Decrease the cost of the bus to $1, while all other parameters remain constant.
Transcribed Image Text:A market segment consists of 500 individuals. A Logit mode choice model (with logit parameter equal to 1) has been estimated for this market resulting in the following utility function: U = ẞm 0.40C 0.037 where C is out-of-pocket cost in $ and T is travel time in min. Values of ẞm are: Bus: 0.00; Rail: 0.50; Car: 1.50. For a particular origin-destination pair, the cost of a car trip is $2 and the duration 8 minutes, a rail trip is $1.50 and takes 12 minutes, while a bus takes 20 minutes and costs $1.25. a. Predict the number of trips for each mode. b. Which one of the following policies would lead to the largest increase in bus passengers? Why? (i) An increase in the price of gas that increases the cost of a car trip to $3, while all other parameters remain constant. (ii) Introducing an express service that decreases the travel time of the rail to 10 min, while all other parameters remain constant. (iii) Decrease the cost of the bus to $1, while all other parameters remain constant.
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