Group Assignment 1
YEAR
Y
P
T
I
H
1986
1200
15
1800
2900
50
1987
1190
15
1790
3100
50
1988
1195
15
1780
3200
60
1989
1110
25
1778
3250
60
1990
1105
25
1750
3275
60
1991
1115
25
1740
3290
70
1992
1130
25
1725
4100
75
1993
1095
30
1752
4300
75
1994
1090
30
1720
4400
75
1995
1087
30
1705
4600
80
1996
1080
30
1710
4815
80
1997
1020
40
1700
5285
80
1998
1010
40
1695
5665
85
1999
1010
40
1695
5800
100
2000
1005
40
1690
5900
105
2001
995
40
1630
5915
105
2002
930
75
1640
6325
105
2003
915
75
1635
6500
110
2004
920
75
1630
6612
125
2005
940
75
1620
6883
130
2006
950
75
1615
7005
150
2007
910
100
1605
7234
155
2008
930
100
1590
7500
165
2009
933
100
1595
7600
175
2010
940
100
1590
7800
175
2011
948
100
1600
8000
190
2012
955
100
1610
8100
200
In early 2003, the Glasure Transportation Authority, a public agency responsible for serving the commuter rail transportation needs of a large city, was faced with rising operating deficits on its system. Also, because of a fiscal austerity program at both the federal and state levels, the hope of receiving additional subsidy was slim.
The board of directors of GTA suggested that because it has been over five years since the last basic fare increase, a fare increase from the current level of $1 to a new level of $1.50 should be considered. Accordingly, the board ordered the manager to conduct a study of the likely impact of this proposed far hike.
You, the system manager, have collected data on important variables thought to have a significant impact on the demand for riders on the Glasure Transportation Authority (UTA). These data have been collected over the past 24 years and include the following variables:
1. Price per ride (in cents) — This variable is designated P. Price is expected to have a negative impact on the demand for riders on the system.
2. Population in 1,000s in the metropolitan area serviced by GTA — It is expected that this variable has a positive impact on the demand for rides on the system. This variable is designated T.
3. Disposable per capita income — This variable was initially thought to have a positive impact on the demand for rides on GTA. This variable is designated I.
4. Parking rate per hour in the downtown area (in cents) — This variable is expected to have a positive impact on the demand for riders on GTA. It is designated H.
5. Weekly riders in 1,000s. It is designated Y.
You have decided to perform a multiple regression on the data to determine the impact of the rate increase.
Based on the demand analysis you learned in chapter 5, determine first the dependent variable for the estimating demand equation.
Questions:
1. Write the estimated demand model for the data given above (use a 3-
decimal points for the estimated coefficients.
2. Provide an economic interpretation for each of the coefficients in the estimated demand equation you have computed.
3. What is the value of the coefficient of determination? How would you interpret this result?
4. Calculate the price elasticity using 2012 data. Explain the estimated coefficient of the price elasticity you just computed.
5. Calculate the income elasticity using 2012 data. Explain the estimated coefficient of the income elasticity you
INSTRUCTION FOR SUBMISSION
All the answers must be typed in Word. When answering the question, give the question number and then properly give the answer.
On the word document, write the group number and the names of only those who actually contributed to the assignment. I would like to emphasize that under any circumstance, do not put a non-contributing member’s name on the documents. If caught, I will give zero on the assignment in question.
Only one person must submit both the Excel file containing the data and regression output and the Word file containing only the answers. I do not want to search through your answers.
All the answers must be typed in Word. When answering the question, give the question number and then properly give the answer.
On the word document, write the group number and the names of those who actually contributed to the assignmen would like to emphasize
that under any circumstance, do not put a non-contributing member’s name on the documents. If caught, I will giv on the assignment in question.
Only one person submit both the Excel file containing the data and output and the Word file containing the answers.
