What pricing policy should transportation authority adopt

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..

User Account

All Pages