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(Step-by-Step) In May 2003, the New York MTA increased subway fares by 33%. Total ridership fell by 1%, while discount ridership increased from 2.4% to

Question: In May 2003, the New York MTA increased subway fares by 33%. Total ridership fell by 1%, while discount ridership increased from 2.4% to 32%. Assume the average discount fare increased by 10%, and the cross-elasticity of demand for regular rides with respect to discount prices is equal to the cross-price elasticity of discount rides with respect to regular fares.

Historically, the MTA used an estimated own-price elasticity for regular rides of -0.1. Based on the given information and assumptions, estimate the own-price elasticity for discount tickets and the cross price elasticity.
Compare the magnitudes of the own-price elasticities for regular and discount fares. Do their relative magnitude make sense? Explain.

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(Step-by-Step) In May 2003, the New York MTA increased subway fares by 33%. Total ridership fell by 1%, while discount ridership increased from 2.4% to

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