Evaulate the price elasticity of demand for subway rides., Ask an Expert

Economics

Scenario:

The subway fare in your town has just been increased from a current level of 50 cents to $1.00 per ride. As a result, the transit authority notes a decline in ridership of 30 percent.

Questions:

a. Compute the price elasticity of demand for subway rides.

b. If the transit authority reduces the fare back to 50 cents, what impact would you expect on the ridership? Why?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9291793

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