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The new york times reported (Feb 17 1996) that subway ridership declined after a fare increase: nearly four million fewer riders in Dec 1995, the first full month after the price of a token increased 25 cents to 1.50 than in the previous Dec, 4.3 percent decline.

a. use this data to estimate the price Elasticity of demand for subway rides.

b . according to your estimate what happens to the transit authority's revenue when the fare rises?

c. Why might your estimate of the Elasticity be unreliable?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91232223

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