Tolling on Sydney Harbour Tunnel on 27

¶ … Tolling on Sydney Harbour Tunnel On 27 January 2009, the New South Wales government introduced a new time of day tolling system for southbound traffic on the Sydney Harbour Bridge (SHB) and Sydney Harbour Tunnel (SHT). Previously, passenger vehicles paid a flat $3 toll to travel south on both these harbour crossings.

The new system introduced the following tolls on weekdays for these two harbour crossings: From 6:30am to 9:30am: $4.00 From 9:30am to 4:00pm: $3.00 From 4:00pm to 7:00pm: $4.00 From 7:00pm to 6:30am: $2.50 Table 1 below shows average weekday southbound traffic volumes on the Sydney Harbour Tunnel for the 12 months before and after the new tolling system was introduced: Table Sydney Habour Tunnel Traffic Before Traffic After 5:30am to 6:30am 6:30am to 9:30am 4:00pm to 7:00pm 7:00pm to 8:00pm 7:00pm to 6:30am (inclusive) 10161 10123 There is no toll on the Ryde Bridge to the west of the Sydney Harbour Bridge and Tunnel.

Table 2 below shows southbound traffic on the Ryde Bridge before and after the new tolling system was introduced for the Sydney Harbour Bridge and Tunnel: Table 2: Ryde Bridge Traffic Before Traffic After 6:30am to 9:30am 4:00pm to 7:00pm 10380 10106 Based on the data in Tables 1 and 2, answer the following questions: 1. Based on the information given in Table 1, calculate the absolute value of the price elasticity of demand for southbound journeys on the Sydney Harbour Tunnel for each of the time periods shown in Table 1.

(Note: use the midpoint formula and show your calculations) (2 marks) Absolute value of 5:30 -- 6:30 is 2.76 2103 x 3 = 6309.00 2539 x 2.50 = 6347.50 midpoint would be 2.76 -- absolute value as stated would be 2.76 (I don't know if your professor wants you to round up or down or at all) Absolute value of 6:30 to 9:30 is 3.12 Absolute value of 4:00 to 7:00 is 3.33 10161 x 3 = 30,483 10123 x 4 = 40,492 midpoint would be 3.50 -- absolute value as stated would be either 3 or 4 depending on if you rounded up or down.

Notice that the midpoint changed (I don't know why - I might have been right the first time). Absolute value of 7:00 to 8:00 is 3.92 8192 x 3 = 24,576 8104 x 4 = 32416 a difference of 7840 midpoint would be 3.92 -- absolute value of 4 (or 3.92 if you don't round). Absolute value of 7:00 to 6:30 is 2.90 7709 x 3 = 23127 8587 x 2.50 = 21467 a difference of 1659.50 midpoint would be 2.90 = absolute value of 3 (or 2.90 if you don't round). Absolute value is calculated by how many units past zero the number goes, but I'm not sure if you round off or not.

It seems that it should not be rounded. 2. Based on your calculations in question 1, indicate whether the price elasticity of demand is elastic, inelastic or unit elastic for each time period given in Table 1. What factors might explain the price elasticity of demand for private car travel on this harbour crossing? (2 marks) The price elasticity of demand is elastic in that the commuters who normally drive the bridge continued to drive the bridge with only a slight drop in the number of commuters from the various time zones.

However, Sydney Harbour picked up approximately 3.9% more traffic on its bridge than before the price change. Some of those came from the Ryde Bridge, but there was only a drop of 336 vehicles from the Ryde Bridge, the other 851 commuters came from somewhere? The elasticity in pricing allowed for the additional commuters to use the Sydney Harbour Bridge and Tunnel that would not have normally used it. 3.

For each of the time periods given in Table 1, what was the change in average daily revenue following the introduction of time of day tolling? (2 marks) 5:30 -- 6:30 AM + 37.50 6:30 -- 9:30 AM + 10,009 4:00 -- 7:00 PM + 7, 840 7:00 -- 8:00 PM - 893.50 7:00 -- 6:30 PM - 756.00 4.

Are the percentage change in price and percentage change in quantity you calculated for 7:00pm to 8:00pm on the Sydney Harbour Tunnel consistent with economic theory? Why "yes" or "no"? (2 marks) Yes, the price elasticity allowed for more people to pay a little bit less in order to achieve a higher ratio at the other time slots. 5. Provide an economic explanation for the answer you gave in 4?