Southeast pennsylvania transit authority

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Assume that the price of a ride on the Southeast Pennsylvania Transit Authority (SEPTA) is $2 and that 1 million people ride SEPTA each day. To help balance a budget shortfall, SEPTA raises its price by 50¢ per ride. The first day of the tax, ridership falls to 800,000. (Hint: In what follows, use the arc-elasticity formula.)

a. As of the first day of the new price, has the policy increased SEPTA revenue?

Reference no: EM132338415

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