A regional transport authority is seeking to manage overcrowding on its suburban rail network during morning peak hours. To encourage commuters to shift their travel times, the authority is reviewing its peak-hour fare pricing strategy.
A comprehensive passenger survey by the Metropolitan Transit Board established that the price elasticity of demand (PED) for peak-time commuter rail travel is −0.18-0.18−0.18 in the short run and −0.54-0.54−0.54 in the long run, as commuters take time to negotiate flexible working arrangements.
Calculate the percentage change in peak-time fares required to achieve a 6.3%6.3\%6.3% reduction in the demand for peak-time commuter rail travel in the short run.
