A new office park is considering to start an express bus service for workers. A survey of office park commuters is conducted and found that mode choice is affected by out-of-pocket costs (OPC) and total travel time (TTT) where the mode utility is expressed by the function Um ao -0.47OPCm - 0.22TTT

A new office park is considering to start an express bus service for workers. A survey of office park commuters is conducted and found that mode choice is affected by out-of-pocket costs (OPC) and total travel time (TTT) where the mode utility is expressed by the function Um ao -0.47OPCm - 0.22TTT

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter10: Consumer Choice Theory

Section: Chapter Questions

Problem 6P

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Use 2 decimal places in your final
3.
A new office park is considering to start an express bus service for workers. A survey of office park commuters is conducted and found that
mode choice is affected by out-of-pocket costs (OPC) and total travel time (TTT) where the mode utility is expressed by the function
Um ao 0.47OPCm - 0.22TTT
Mode
Automobile
Bus
ao
0.73
0 0.75 18
OPC TTT
10.5
---
a. What is the expected percentage of bus riders based on the parameters given?
What would the bus mode share be if the bus fare is reduced to zero?
b.

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