The Sydney Transportation Company operates an urban bus system in New South Wales, Australia. Economic analysis performed
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Sydneys 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 price elasticity of demand is currently estimated at 1.1, given hourly parking rates of $1.50. It is estimated, however, that the price elasticity will change to 1.2 when parking rates increase to $2.50. Using these data, estimate the average daily ridership for 2006 and2007.
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Managerial economics applications strategy and tactics
ISBN: 978-1439079232
12th Edition
Authors: James r. mcguigan, R. Charles Moyer, frederick h. deb harris
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