Question: 7) A ferry in Boston Harbor travels between Hingham (south of Boston) and Rowes Wharf (downtown Boston). A monthly pass on this ferry costs $329.

7) A ferry in Boston Harbor travels between Hingham (south of Boston) and Rowes Wharf (downtown Boston). A monthly pass on this ferry costs $329. The Massachusetts Bay Transit Authority (MBTA) is considering increasing the price for the monthly pass by 6.7%. Currently the MBTA sells 2,819 monthly passes on this route to commuters. a. An estimate for the price sensitivity of commuters to the monthly pass price is = -0.9. If this is the case, how many monthly passes will be sold if the price is raised by 6.7%? b. Is the current revenue with the pass price of $329 higher or lower than the expected revenue if the price is increased by 6.7%? c. If the -0.9 estimate is a short run elasticity, what is the expected long run number of passes sold and expected revenue if long run = -1.2

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