The New York Times reported (Feb.17, 1996) that subway ridership declined after a fare increase: “There were nearly 4 million fewer riders in December 1995, the first full month after the price of a token increased 25 cents to $1.50, than in the previous December, a 4.3 percent decline.” Use these data to estimate the price elasticity of demand for subway rides. According to your estimate, what happens to the Transit Authority's revenue when the fare rises? Why might your estimate of the elasticity be unreliable?
The New York Times reported (Feb.17, 1996) that subway ridership declined after a fare increase: “There were nearly 4 million fewer riders in December 1995, the first full month after the price of a token increased 25 cents to $1.50, than in the previous December, a 4.3 percent decline.” Use these data to estimate the price elasticity of demand for subway rides. According to your estimate, what happens to the Transit Authority's revenue when the fare rises? Why might your estimate of the elasticity be unreliable?
Social Psychology (10th Edition)
10th Edition
ISBN:9780134641287
Author:Elliot Aronson, Timothy D. Wilson, Robin M. Akert, Samuel R. Sommers
Publisher:Elliot Aronson, Timothy D. Wilson, Robin M. Akert, Samuel R. Sommers
Chapter1: Introducing Social Psychology
Section: Chapter Questions
Problem 1RQ1
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The New York Times reported (Feb.17, 1996) that subway ridership declined after a fare increase: “There were nearly 4 million fewer riders in December 1995, the first full month after the price of a token increased 25 cents to $1.50, than in the previous December, a 4.3 percent decline.”
Use these data to estimate the price elasticity of demand for subway rides. According to your estimate, what happens to the Transit Authority's revenue when the fare rises? Why might your estimate of the elasticity be unreliable?
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