The elasticity of transit demand with respect to price has been found to be equal to -2.75. which means that a 1% increase in transit fare will result in a 2.75 decrease in the number of passengers using the system. A transit line on this system carries 12,500 passengers per day, charging 50 cents per ride. The management wants to raise the fare to 70 cents per ride. What advice would you offer to management?

The elasticity of transit demand with respect to price has been found to be equal to -2.75. which means that a 1% increase in transit fare will result in a 2.75 decrease in the number of passengers using the system. A transit line on this system carries 12,500 passengers per day, charging 50 cents per ride. The management wants to raise the fare to 70 cents per ride. What advice would you offer to management?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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