Homework #4
Due 10/18/2023 at Midnight
You must travel 5 miles a day. There are two modes of traveling 5 miles. Here are the data;
|
Mode
|
Time Wait (in minutes)
|
Speed per mile
|
Out of Pocket Cost Per trip ($)
|
|
Walk
|
0
|
2.5
|
0
|
|
Bus
|
10
|
15
|
1.5
|
1. Solve for the Wage in $ per hour such that a person is indifferent between walking or taking the Bus.
2. There are 100,000 people in the city and the Wage distribution per hour is uniformly distributed with a median of 20 and a max of $40 and amin of $10. Write out the expected number of bus riders who take the 5 mile trip.
3. Building on #2, if each bus holds 50 people and each bus emits 8 units of pollution per bus mile, show your algebra of how much pollution the public transit sector produces.
4. If the City reduces the wait time for the bus to 5 minutes by improving services, redo #1 and explain the intuition for your new answer.
5. Building on #2, an entrepreneur is thinking of entering the urban transportation market by
introducing a Scooter called the Trojan. She must pay a fixed cost of $400 to enter the market and her marginal cost of producing rides equals $2. If she enters the market, commuters will now have 3 choices.
|
Mode
|
Time Wait (in minutes)
|
Speed per mile
|
Out of Pocket Cost Per trip ($)
|
|
Walk
|
0
|
2.5
|
0
|
|
Trojan
|
0
|
10
|
4
|
|
Bus
|
10
|
15
|
1.5
|
What is the entrepreneur’s expected profits from entering the transportation market? Will she enter the market? (hint; how many transit consumers will substitute and use the Trojan scooter rather than walking or taking the bus?)
6. A political economy question; will the public transit worker Union welcome the Scooter competition? Explain your answer.