Suppose the demand for crossing the Golden Gate Bridge is given by Q = 10,000 − 1,000P. a. If the toll (P) is $3, how much revenue is collected? b. What is the price elasticity of demand at this point? c. Could the bridge authorities increase their revenues by changing their price? d. In 2019, the San Francisco Bay area Water Emergency Transportation Authority (WETA) announced it was considering the implementation of hovercraft service as a supplement to existing ferries. Suppose that a fast hovercraft alternative to the Golden Gate Bridge is implemented between Marin County and San Francisco. How would the new service affect the elasticity of demand for trips across the Golden Gate Bridge?
Suppose the demand for crossing the Golden Gate Bridge is given by Q = 10,000 − 1,000P. a. If the toll (P) is $3, how much revenue is collected? b. What is the price elasticity of demand at this point? c. Could the bridge authorities increase their revenues by changing their price? d. In 2019, the San Francisco Bay area Water Emergency Transportation Authority (WETA) announced it was considering the implementation of hovercraft service as a supplement to existing ferries. Suppose that a fast hovercraft alternative to the Golden Gate Bridge is implemented between Marin County and San Francisco. How would the new service affect the elasticity of demand for trips across the Golden Gate Bridge?
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Suppose the
a. If the toll (P) is $3, how much revenue is collected?
b. What is the
c. Could the bridge authorities increase their revenues by changing their price?
d. In 2019, the San Francisco Bay area Water Emergency Transportation Authority (WETA) announced it was considering the implementation of hovercraft service as a supplement to existing ferries. Suppose that a fast hovercraft alternative to the Golden Gate Bridge is implemented between Marin County and San Francisco. How would the new service affect the elasticity of demand for trips across the Golden Gate Bridge?
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Step 1: Describe the significance of elasticity
VIEWStep 2: Figure out the revenue collected
VIEWStep 3: Calculate the measure of the elasticity at a price of $3
VIEWStep 4: Examine if the bridge authorities increase their revenues by changing their price
VIEWStep 5: Examine the scenario when a new competitor joins in
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