The South Coast Transit Authority of Toronto forecasts the demand for its service as follows:

Qd = 5 450 - 2 000 P - 0.1 Y + 100 Pa

• where: Qd is the number of bus tickets demanded daily;
• P is the price of a bus ticket
• Y is the average income of the population
• Pa is the cost of using alternative modes of Transit (cars).

QUESTIONS:

A) How should the sign (+ or -) be interpreted in the demand equation before each coefficient? Be as explicit as you can

B) The demand function can be determined by using Y = $300 and Pa = $5.80and draw the demand curve. Ensure the intersections with the axes are properly established.

C) What should the ticket price be, given the fact that only 4000 passenger travel can be accommodated daily and the tickets are aimed at 100 percent occupancy? Display clearly your calculations. (P.S: The pricing of bus tickets mainly helps to regulate the passenger flow)

(Note: The Transit Authority provides a public service not to maximize revenue profits)

D) What does the shortage of passenger trips as alternate solution modes of transportation cost an increase of $2?

E) How can the firm adjust its price to match the quantity demanded? Give a numerical response