Compute the price elasticity of demand for the subway rides

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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 the subway rides.

b) If the transit authority reduces the fare back to 50 cent, what impact would you expect on the ridership? Why?

Reference no: EM13213077

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