12. The demand function for automobile travel along a major corridor in a medium-sized city is...
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12. The demand function for automobile travel along a major corridor in a medium-sized city is estimated to be Q=aA22B13C-0.4 D0.75 where Q = automobile trips per hour (peak-hour) a = constant A = travel time by automobile in minutes B = travel time by bus in minutes C average cost by automobile D = average cost by bus (a) Justify the signs (+ or -) of the exponents of parameters A, B, C, and D. (b) Because of congestion likely to occur on this corridor, the travel times of automo- biles would increase by 20%, and travel times of buses would increase 10%. At the same time, auto travel costs rise 5% and bus costs decrease 15%. What will be the percentage change in auto traffic? (c) If the average cost of travel by bus increases by 10%, but the travel time by bus de- creases by 10%, what would be the overall percentage increase or decrease in auto travel? 12. The demand function for automobile travel along a major corridor in a medium-sized city is estimated to be Q=aA22B13C-0.4 D0.75 where Q = automobile trips per hour (peak-hour) a = constant A = travel time by automobile in minutes B = travel time by bus in minutes C average cost by automobile D = average cost by bus (a) Justify the signs (+ or -) of the exponents of parameters A, B, C, and D. (b) Because of congestion likely to occur on this corridor, the travel times of automo- biles would increase by 20%, and travel times of buses would increase 10%. At the same time, auto travel costs rise 5% and bus costs decrease 15%. What will be the percentage change in auto traffic? (c) If the average cost of travel by bus increases by 10%, but the travel time by bus de- creases by 10%, what would be the overall percentage increase or decrease in auto travel?
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Related Book For
Managerial economics
ISBN: 978-1118041581
7th edition
Authors: william f. samuelson stephen g. marks
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