a. Use the given information to find a linear demand equation. b. Give the units

Question

a. Use the given information to find a linear demand equation.

b. Give the units of measurement and interpretation of the slope.

c. What would have been the effect on ridership of raising the fare to $12 per ride?

90.-/13 pointsWaneFM7 1.3.089.MI.SA This question has several parts that must be completed sequentially. If you skip a part of the question, you will not receive any points r the skipped part, and you will not be able to come back to the skipped part Tutorial Exercise In 2005 the monorail in a certain city charged $7 per ride and had an average ridership of about 23,000 per day. In December 2005 the monorail company raised the fare to $11 per ride, and average ridership in 2006 plunged to around 11,000 per day (a) Use the given information to find a linear demand equation (b) Give the units of measurement and interpretation of the slope. (c) What would have been the effect on ridership of raising the fare to $12 per ride? Need Help? L Read It

Explanation / Answer

a)

7a + b =23000

11a + b = 11000

Thus, 4a = -12000 , a= -3000

b= 44000

Hence, the linear demand equation is 44000 - 3000 * (cost per ride)

b) The demand for the number of rides decreases by 3000 for every dollar increase in the cost per ride.

The slope of the equation is -3000.

c) If the fare is raised to $12 per ride, according to the above demand equation, the demand would be = 44000 - 3000* 12 = 8000

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