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Question;YEAR;Y P T I H;1986;1200 15 1800 2900 50;1987;1190 15 1790 3100 50;1988;1195 15 1780 3200 60;1989;1110 25 1778 3250 60;1990;1105 25 1750 3275 60;1991;1115 25 1740 3290 70;1992;1130 25 1725 4100 75;1993;1095 30 1752 4300 75;1994;1090 30 1720 4400 75;1995;1087 30 1705 4600 80;1996;1080 30 1710 4815 80;1997;1020 40 1700 5285 80;1998;1010 40 1695 5665 85;1999;1010 40 1695 5800 100;2000;1005 40 1690 5900 105;2001;995 40 1630 5915 105;2002;930 75 1640 6325 105;2003;915 75 1635 6500 110;2004;920 75 1630 6612 125;2005;940 75 1620 6883 130;2006;950 75 1615 7005 150;2007;910 100 1605 7234 155;2008;930 100 1590 7500 165;2009;933 100 1595 7600 175;2010;940 100 1590 7800 175;2011;948 100 1600 8000 190;2012;955 100 1610 8100 200;In;early 2003, the Glasure Transportation Authority, a public agency responsible;for serving the commter rail transportation needs of a large city, was faced;with rising operating deficits on its system. Also, because of a fiscal;austerity program at both the federal and state levels, the hope of receiving;additional subsidy was slim.;The;board of directors of GTA suggested that because it has been over five years;since the last basic fare increase, a fare increase from the current level of;$1 to a new level of $1.50 should be considered. Accordingly, the board ordered;the manager to conduct a study of the likely impact of this propsed fair hike.;You;the system manager, have collected data on important variables thought to have;a significant impact on the demand for riders on the Glasure Transportation;Authority (UTA). These data have been collected over the past 24 years and;include the following variables;1.;Price per ride (in cents)-This variable is designated P. Price is expected to;have a negative impact on the demand for riders on the system.;2.;Population in 1,000s in the metropolitan area serviced by GTA -- It is expected;that this variable has a positive impact on the demand for rides on the system.;This variable is designated T.;3.;Disposable per capita income-- This variable was initially thought to have a;positive impact on the demand for rides on GTA. This variable is designated I.;4.;Parking rate per hour in the downtown area (in cents) -- This variable is;expected to have a positive impact on the demand for riders on GTA. It is;designated H.;5.;Weekly riders in 1,000s. It is designated Y.You have decided to perform a;multiple regression on the data to determine the impact of the rate increase.;Based on the demand analysis you learned in chapter 5, determine first the;dependent variable for the estimating demand equation.;Questions:1.;Estimate the coefficients of the demand model for the data given above.;2.;Provide an economic interpretation for each of the coefficients in the;estimated demand equation you have compuated.;3.;What is the value of the coefficient of determination? How would you interpret;this results?;4.;Calculate the price elasticity using 2012 data. Explain the coefficient of the;price elasticity you just computed.;5.;Calculate the income elasticity using 2012 data. Explain the coefficient of the;income elasticity you;6.;If the fare is increased to $1.50, what is the expected impact on weekly;revenues to the transit system if all other variables remain at their 2012;levels?

 

Paper#61670 | Written in 18-Jul-2015

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