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Answer to Question #24478 in Finance for Tonya
Question #24478
. The subway fare in your town has just been increased from a current level of 50
cents to $1.00 per ride. As a result, the transit authority notes a decline in ridership
of 30 percent.
a. Compute the price elasticity of demand for subway rides.
b. If the transit authority reduces the fare back to 50 cents, what impact would
you expect on the ridership? Why?
cents to $1.00 per ride. As a result, the transit authority notes a decline in ridership
of 30 percent.
a. Compute the price elasticity of demand for subway rides.
b. If the transit authority reduces the fare back to 50 cents, what impact would
you expect on the ridership? Why?
Expert's answer
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