¶ … 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…