Question

Table 1

Average Daily Transit Riders	Average Downtown Round-Trip Fare	Parking Rate
(2005)	(Dollars)	(Dollars)
5,000	1.00	1.50

Table 2

Year	Round-Trip Fare	Average Parking Rates
	(Dollars)	(Dollars)
2006	1.00	2.50
2007	1.25	2.50

Sydney's economists supplied the following information so that the firm can estimate ridership. Based on past experience, the coefficient of cross elasticity between bus ridership and downtown parking rates is estimated at 0.2, given a fare of $1.00 per round trip. This is not expected to change for a fare increase to $1.25. The price elasticity of demand is currently estimated at −1.1, given hourly parking rates of $1.50. It is estimated, however, that the price elasticity will change to −1.2 when parking rates increase to $2.50.

Using these data, estimate the average daily ridership for 2006 and 2007.

Year	Average Daily Transit Riders
2006
2007

Answer 1