In early 2003, the Glasure Transportation Authority, a public agency

 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