A newspaper reported that an increase in bus fare decreased the number of people travelling from Green Bus Metro. “There has been a 5 percent decline in Green Bus Metro ridership as the fare increased from Rs.50 to Rs.75.” Calculate the price elasticity of demand.  What is the effect of fare increase on Green Bus Metro revenue?

Micro Economics For Today
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ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 7SQP: Suppose a movie theater raises the price of popcorn 10 percent, but customers do not buy any less...
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A newspaper reported that an increase in bus fare decreased the number of people travelling from Green Bus Metro. “There has been a 5 percent decline in Green Bus Metro ridership as the fare increased from Rs.50 to Rs.75.”

  1. Calculate the price elasticity of demand
  2. What is the effect of fare increase on Green Bus Metro revenue?
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