As a transit planner, you must predict how many people ride commuter trainess and how much money is generated from train fares. According to a a recent study , the short run price elasticity of demand for a commuter rail is .62 and the long run elasticity is 1.59. The current ridership is 100,000 people per day. Suppose fares increase 10%.
Predict or tell me the changes in train ridership over a one month period(short run) and a five year period ( long run)?
Over the one-month period , will total revenue increase or decrease? what will happen in the five year period.?
Use the Price elasticity of Demand Elasticity of demand= Percentage change in quantity demanded/(diveded by) percentage change in price.
2007-03-24 10:43:34 · 1 answers · asked by Economic Biotch===> 2 in Social Science ➔ Economics
Over a one month period, the ridership stays approximately the same and the revenue increases.
Over a long period the revenue decreases and the ridership decreases.
2007-03-24 12:24:55 · answer #1 · answered by Santa Barbara 7 · 0⤊ 0⤋