Question

Richard Voith estimated the price elasticity of demand for round-trip rail fare to be 0.62. If fares rose by 30 percent, one would expect the quantity of round-trip tickets purchased to:

Answer 1

Fall by 18.6%.

Step-by-step explanation:

Calculation for quantity of round-trip tickets purchased

Using this formula

Quantity of round-trip tickets purchased=Round-trip rail fare*Fares percentage

Let plug in the formula

Quantity of round-trip tickets purchased=30%*0.62

Quantity of round-trip tickets purchased=0.186*100

Quantity of round-trip tickets purchased=18.6%

Therefore one would expect the quantity of round-trip tickets purchased to:Fall by 18.6%.