The city of Bethlehem, Pennsylvania, was considering raising the fine from $10 to $15 for cars parked at a meter whose time had expired. The city’s parking authority believed that raising the fine would increase parking revenue from $5.5 million to $5.9 million. The director of the city’s parking authority was quoted as saying that the purpose of increasing the fine was to “discourage illegal parking” and “to allow the parking authority to construct a new parking garage.”
a. Did the parking authority believe that the demand for parking at an expired meter was elastic or inelastic? Briefly explain.
b. Would the parking authority be more successful in meeting its goal of discouraging illegal parking if the demand for parking at an expired meter were more elastic or more inelastic? Would it be more successful in meeting its goal for raising more revenue for building a new parking garage if the demand for parking at an expired meter were more elastic or more inelastic? Briefly explain in what sense the parking authority’s goals were in conflict.