The number of taxicabs in motorville and the taxicab fares, Ask an Expert

Economics

Q1. The number of taxicabs in Motorville and the taxicab fares are regulated. The fare currently charged is $5 a ride. Motorville taxicab drivers want to obtain government's permission to raise the fare to increase their revenues and ask you to be their economic adviser. After studying the market, you come up with the following demand schedule for taxicab rides.

Q2. The demand function has been estimated to be: Q= 2000+15Y-5.5P where Y is income in thousand euros, Q is the quantity demanded in units and P is the price per unit, when P= 150 euros and Y= 15(000) euros , determine the following:
a- price elasticity of demand
b- income elasticity of demand.

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