What pricing policy should transportation authority adopt

Assignment Help Macroeconomics
Reference no: EM13182588

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 dollar 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 eliminate its operating deficit.

(a) what pricing policy should the transportation authority adopt? Why?

(b) What price per ride must the public transportation authority charge to eliminate the deficit if it cannot reduce costs?

Reference no: EM13182588

Questions Cloud

What is the maximum value of the hhi : AT&T: 38.3% Verizon: 31.3% Sprint: 15.9% T-Mobile: 12.2% Other: 2.3% What is the maximum value of the HHI (a) Before the AT&T/T-Mobile deal? (b) If AT&T buys T-Mobile?
Calculate the breakeven - comparative income statements : Compute the allocation rate that was used for the manufacturing overhead in Exhibits 2 and 3. Show your computations in enough detail and with enough organization
How much should domestic automakers increase the price : A researcher estimated that the price elasticity of demand for automobiles in the U.S. is -1.2, while the income elasticity off demand is 3.0. Next year, U.S. automakers intend to increase the average price of automobiles by 5 percent, and they ex..
Era of modern policing-characterized by extensive corruption : Which era of modern policing is characterized by extensive corruption that overshadowed the social service efforts of police during this time period?
What pricing policy should transportation authority adopt : 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 dollar and the price elasticity of demand for public transportation has been estimated t..
Environmental-ecological footprint : The purpose of this lab is to learn more about how connected you are to the ecosystems and biosphere that you inhabit. You will learn how your everyday choices contribute to the human impacts on our environment you've been learning about. Most import..
What maximum total weight limit on passengers : Your consulting company has been hired by an airline to analyze data on passenger and luggage weights. The data refer to a 200 seat aircraft that is always full. You are given data that show that as a good approximation passenger weights W ~ N (15..
Performance evaluation and review technique : Compose the tasks that would be needed to complete a Gantt chart (project schedule) for outsourcing the company's payroll system. Compare the advantages and disadvantages of using a Gantt chart versus using the Performance evaluation and review techn..
What is the demand elasticity : George has been selling 5,000 T-shirts per month for $8.50. When he increased the price to $9.50 he sold only 4,000 T-shirts. What is the demand elasticity? If his marginal cost is $4 per shirt, what is his desired markup and what is his initial a..

Reviews

Write a Review

Macroeconomics Questions & Answers

  Question about hypothetical economy

Suppose that an raise in a household's disposable income from $40,000 to $48,000 leads to an raise in consumption from $35,000 to $41,000,;

  Marketing strategy of brokerage houses

During the late 1990s, several mergers among brokerage houses resulted in the acquiring firm paying a premium on the order of $100 for each of the acquired firm's customers.

  Explain impact of the proposed tax on optimal retirement age

Under current law, most Social Security recipients do not pay federal or state income taxes on their Social Security benefits. Suppose the government proposes to tax these benefits at the same rate as other types of income.

  Explain how much will your industry total revenues

Explain how much will your industry's total revenues (revenues from both products) change if you increase the price of good X by 1 percent.

  Elucidate possible consequences of failing to properly

Elucidate possible consequences of failing to properly disclose certain items in financial statements.

  Price and quantity and profits of monopolist

Impact of technology advance a monopolist has the following demand function: Solve for the price and quantity that the monopolist would choose to minimize its profit. And also calculate the resulting profit.

  Elucidate impact will an unanticipated increase in the money

Elucidate impact will an unanticipated increase in the money supply have on the real interest rate, real output, and employment in the short run.

  Discuss completely all forward exchange transactions

Discuss completely all forward exchange transactions that take place when the contracts are made. Describe what actually takes place three months later.

  Effect on the demand curve for hybrid cars

The effect on the demand curve for hybrid cars (run on electric and gas and get much greater gas mileage) vs. regular cars (run only on gas) when the price of gas doubles. You need two graphs.

  Find average and marginal product

The manager of a national retailing outlet recently hired an economist to estimate the firm's production function. Based on the economist's report, the manager now knows that the firm's production function

  Determine effective rate on installment loans

The Dade Corporation is borrowing $300,000 for one year and paying $27,000 in interest to Miami National Bank. The Bank Requires a 20% compensating balance.

  Describing the problems of bank of canada

What are the two problems facing the Bank of Canada in trying to control the money supply precisely?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd