Forums Homework Help What pricing policy should the public transportation authority adopt?

Tagged: 

Viewing 1 post (of 1 total)
  • Author
    Posts
  • #8514
    ahwriter
    Participant

    The total operating revenues of a public transportation authority are $100 million while its total operating costs are $120 million. The price of the ride is $1, 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 public transportation authority adopt? Why?

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

Viewing 1 post (of 1 total)
  • You must be logged in to reply to this topic.