The city of Galata Transit Authority runs the only bus company in the city. The current...
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The city of Galata Transit Authority runs the only bus company in the city. The current price of a bus ticket is $1.25 and 800,000 tickets are sold each week. An economic study has found the demand elasticity of tickets to be |ɛ|=0.85. a) Is demand elastic, unit elastic or inelastic? b) What is the total revenue for bus ticket sales? d) c) Should the Transit Authority increase or decrease ticket prices to increase total revenue? Suppose that the city wants to increase bus ridership by 10% for environmental reasons. What price level will accomplish this increase? The city of Galata Transit Authority runs the only bus company in the city. The current price of a bus ticket is $1.25 and 800,000 tickets are sold each week. An economic study has found the demand elasticity of tickets to be |ɛ|=0.85. a) Is demand elastic, unit elastic or inelastic? b) What is the total revenue for bus ticket sales? d) c) Should the Transit Authority increase or decrease ticket prices to increase total revenue? Suppose that the city wants to increase bus ridership by 10% for environmental reasons. What price level will accomplish this increase?
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a To determine if the demand for bus tickets is elastic unit elastic or inelastic we need to examine ... View the full answer
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Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
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