A news website reported (Feb. 17, 2020) that ridership of Karachi Metro Bus declined after a fare increase: “There were nearly four million fewer riders in December 2019, the first full month after the price of a token increased Rs. 25 to Rs.150, than in the previous December, a 4.3 percent decline.” Use these data to estimate the price elasticity of demand for Karachi Metro Bus. According to your estimate, what happens to the Karachi Metro Bus’s revenue when the fare rises? Why might your estimate of the elasticity be unreliable?
A news website reported (Feb. 17, 2020) that ridership of Karachi Metro Bus declined after a fare increase: “There were nearly four million fewer riders in December 2019, the first full month after the price of a token increased Rs. 25 to Rs.150, than in the previous December, a 4.3 percent decline.” Use these data to estimate the price elasticity of demand for Karachi Metro Bus. According to your estimate, what happens to the Karachi Metro Bus’s revenue when the fare rises? Why might your estimate of the elasticity be unreliable?
Chapter5: Price Elasticity Of Demand And Supply
Section: Chapter Questions
Problem 17SQ
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A news website reported (Feb. 17, 2020) that ridership of Karachi Metro Bus declined after a fare increase: “There were nearly four million fewer riders in December 2019, the first full month after the price of a token increased Rs. 25 to Rs.150, than in the previous December, a 4.3 percent decline.”
Use these data to estimate the
According to your estimate, what happens to the Karachi Metro Bus’s revenue when the fare rises?
Why might your estimate of the elasticity be unreliable?
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