TABLE 1 AVERAGE DAILY AVERAGE DOWN- TRANSIT RIDERS TOWN ROUND-TRIP PARKING (2005) FARE ($) RATE ($) 5,000 1.00 1.50 TABLE 2 AVERAGE ROUND-TRIP PARKING YEAR FARE ($) RATES ($) 2006 1.00 2.50 2007 1.25 2.50
The Sydney Transportation Company operates an urban bus system in New South Wales, Australia. Economic analysis performed by the firm indicates that two major factors influence the demand for its services: fare levels and downtown parking rates. Table 1 presents information available from 2005 operations.
Sydney’s economists supplied the following information so that the firm can estimate ridership. Based on past experience, the coefficient of cross elasticity between bus ridership and downtown parking rates is estimated at 0.2, given a fare of $1.00 per round trip. This is not expected to change for a fare increase to $1.25. The
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