A zonal interchange is served by a local bus route and an express bus route. The current travel times and fares associated with the two types of service are shown in the table below:
Travel time (minutes) Fare
Local Bus 50 $0.50
Express Bus 30 $1.00
The current transit patronage is 4000 trips per peak period, and it is split 40-60 between the express and local bus services. The linear-arc elasticities of demand are given in the table below:
Local Express
Time Fare Time Fare
Local Bus -0.02 -0.03 0.01 0.02
Express Bus 0.09 0.62 -0.08 -0.15
a) Calculate the effect of raising the express bus fare to $1.50.
b) Estimate the effect of expanding the number of express buses and thus reducing the express bus travel time to 25 minutes.
c) Assuming that the elasticities provided above are shrinkage ratios (point elasticities), estimate the combined effect of raising express bus fares to $1.30 and lowering the local bus fare to $0.40.
Travel time (minutes) Fare
Local Bus 50 $0.50
Express Bus 30 $1.00
The current transit patronage is 4000 trips per peak period, and it is split 40-60 between the express and local bus services. The linear-arc elasticities of demand are given in the table below:
Local Express
Time Fare Time Fare
Local Bus -0.02 -0.03 0.01 0.02
Express Bus 0.09 0.62 -0.08 -0.15
a) Calculate the effect of raising the express bus fare to $1.50.
b) Estimate the effect of expanding the number of express buses and thus reducing the express bus travel time to 25 minutes.
c) Assuming that the elasticities provided above are shrinkage ratios (point elasticities), estimate the combined effect of raising express bus fares to $1.30 and lowering the local bus fare to $0.40.
