Find price per ride based on the price elasticity of demand

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Reference no: EM13188273

The total operating revenues of a public transportation authority are $100 million while its total operating costs are $120 million. The price of a ride is $1 and the price elasticity of demand for public transportation has been estimated to be -0.4. By law, the public transportation authority must take steps to eliminiate its operating deficit. (a) Should the transportation authority increase or decrease the price per ride based on the price elasticity of demand? (b) Using the following equation : Delta Q/ Qdivided by Delta P/P- Increase the price of a ride to$1.50

Reference no: EM13188273

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