Question #2 (externalitiesspreadsheet from the SEPTA case study)

Please review and use the materials provided in the Harvard Case Study Readings for "The Quest for Sustainable Public Transit Funding: SEPTA's 2013 Capital Budget Crisis". This paper provides sufficient data in Exhibits 8 and 9 to answer the Total Revenue, Subsidy and Elasticity Questions. Exhibits 5 and 6 offer insight into the demographic information.This is an analytic question that uses math for a decision making process.

(a and b and crequire numerical answersto be clear, I need to be given the numbers)

Also, the elasticity equation you will need to use is:

Price Elasticity of Demand = (P/Q)times(Change in Q/Change in P)

You are provided different elasticity scenarios offered (based on price increases of between 5% and 20%)

1. How much is the initial Government Operating Subsidy? How much is the State's Operating Subsidy? (4 Points)
2. When reviewing Exhibits 5 and 6, what data stands out as the population that is more likely to use Public Transportation? (2 Points)
3. Would Total Revenue increase or decrease if the per ride fares were increased by 10% or 15% andHow much will they go up (this requires a numeric answer and you must show your work)? (9 Points)
4. According to this analysis, can fare increases eliminate the State's Operating Subsidy and why? (2 Points)
5. What are the implications on fairness that these increases create? (3 points)

33 Exhibit 5. Characteristics of SEPTA Service Area by County County Bucks Chester Delaware Montgomery Philadelphia Land area in square 604 751 184 483 134 miles, 2010 Persons per square mile, 1,035 665 3,031 1,656 11,380 2010 Population, 2013 626,976 509,468 561,973 812,376 1,553,165 estimate White, non-Hispanic, 85.8% 81.1% 69.4% 77.7% 36.3% non-Latino, 2013 Black/African American, 4.0% 6.4% 20.9% 9.3% 44.2% 2013 Hispanic or Latino, 2013 4.7% 7.0% 3.4% 4.7% 13.3% Asian, 2013 4.4% 4.5% 5.2% 7.1% 5.9% Foreign-born (2008- 8.1% 8.7% 8.9% 9.6% 11.8% 2012) High School degree or 92.9% 92.7% 91.5% 93.2% 80.4% higher, persons aged 25+ (2008-2012) Bachelor's degree or 32.1% 48.3% 31.5% 45.1% 23.2% higher, persons aged 25+ (2008-2012) Home ownership rate 78.2% 76.4% 70.8% 73.2% 54.1% (2008-2012) Persons per household 2.68 2.64 2.60 2.53 2.54 (2008-2012) Median household $76,859 $86,184 $64,242 $78,984 $37,016 income (2008-2012) Below poverty level 5.3% 6.5% 9.8% 6.1% 26.2% (2008-2012)34 Exhibit 6. Commuting Data by County of Residence, 2013, for Workers Aged 16 & Older County Bucks Chester Delaware Montgomery Philadelphia Workers 16 313,271 256,864 259,728 408,506 626,208 years & older Mean travel 28.2 27.5 27.6 27.5 31.8 time to work, in minutes 35 Workers who 9,230 8,129 27,135 21,858 170,120 commute via public transit % of workers 2.9% 3.2% 10.4% 5.4% 27.2% who commute via public transit % of workers 82.2% 79.9% 73.3% 78.4% 49.9% who commute alone via car % of workers 7.2% 5.9% 6.7% 7.2% 8.5% who carpool % of workers .3% .09% .5% .3% 2.3% who bicycle % of workers 1.8% 4.3% 4.6% 3.0% 8.1% who walk % of workers 4.9% 6.2% 3.9% 5.0% 2.9% who work at homeExhibit 8. Comparing Costs Three Ways, by SEPTA Division, FY2013 Division Total Average Average Average Total Average Average Average Total Average Average Average Operating Cost per Cost per Cost per Fare Fare Per Fare Per Fare Government Subsidy Subsidy Subsidy Budget in Mile Route 42 Trip Revenue Trip Mile Revenue Subsidy in Per Per Mile Per 37 41 43 45 46 000s Traveled Mile, in in 000s Traveled Per 000s Trip Traveled Route 40 000s Route Mile, in Mile, in 48 000s 44 000s City $820,996 $2.94 $.95 $955.76 $276,632 $.99 $.32 $322.04 $508,157 $1 82 $.59 $591.57 Transit Victory $91,147 $5.11 S.88 $246.34 $21,894 $1.23 $.21 $59.17 $67,376 $3.78 $.65 $182.10 Frontier $32,982 $7.92 $1.12 $93.17 $5,764 $1.38 $.19 $16.28 $26,573 $6.38 $.90 $75.06 Regional $285,993 $7.94 $.54 $1,021.40 $137,366 $3.81 $.26 $490.59 $144,370 $4.01 $.27 $515.61 Rail Total $1,239,886 $3.65 S.81 $665.53 $441,656 $1.30 $.29 $237.07 $746,478 $2.20 $.49 $400.69Exhibit 9. Elasticities of Across-the-Board Fare Increases" Point Elasticity Transit System Fare + 5% Fare + 10% Fare + 15% Fare + 20% Average City Rail -0.12 -0.13 -0.14 -0.14 -0.13 City Bus -0.23 -0.16 -0.20 -0.18 -0.20 Victory -0.04 -0.08 -0.13 -0.13 -0.10 Frontier -0.31 -0.28 -0.29 -0.29 -0.29 Regional Rail -0.87 -0.83 -0.81 -0.79 -0.82