2 A standard ride on a Met Council MetroTransitbus costs $2.00. Bus transportation typically haslow price-elastic of demand (in absolute value).However, the service-elasticity of demand,which measures the responsiveness of rides tothe time spent waiting for the next bus, tends tobe much higher. To balance its budget, the MetCouncil is thinking about reducing the frequencyof all bus routes. So a bus that used to arriveevery 15 minutes would now arrive every 22minutes. Does this make sense? Why or whynot?

Elasticity of demand refers to the responsiveness of change in demand with respect to the change in…

A standard ride on a Met Council MetroTransit bus costs $2.00. Bus transportation typically has low price-elastic of demand (in absolute value). However, the service-elasticity of demand, which measures the responsiveness of rides to

A standard ride on a Met Council MetroTransit bus costs $2.00. Bus transportation typically has low price-elastic of demand (in absolute value). However, the service-elasticity of demand, which measures the responsiveness of rides to

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A standard ride on a Met Council MetroTransit
bus costs $2.00. Bus transportation typically has
low price-elastic of demand (in absolute value).
However, the service-elasticity of demand,
which measures the responsiveness of rides to
the time spent waiting for the next bus, tends to
be much higher. To balance its budget, the Met
Council is thinking about reducing the frequency
of all bus routes. So a bus that used to arrive
every 15 minutes would now arrive every 22
minutes. Does this make sense? Why or why
not?

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