The UCLA transportation economist Donald Shoup developed a formula to explain the rational maximum cruising time for parking. Calculate the cruising time elasticity (i. e., the point elasticity using calculus) with respect to the price (p). At a price of p=5 and m=12, what is the elasticity of c with respected to p? At this point, how will a 1% increase in p alter the maximum cruising time? Refer to the elasticity you calculated.

The above elasticity suggests that by raising the curb parking price by 10% reduces the time drive are willing to cruise by only 7.1%. also the increase of curb pricing would make elasticity greater that shows that curb park pricing by 1% reduces the drivers that are willing to cruise by only 2.3 %

Explanation:

Solution

Given that:

Now, when we look at the papers designed by the economists for the various formulas of calculating elasticity related to six factors examples like, the price of off street parking, the price of fuel, the number of person or individuals in a car, the price of curb parking, time value, we would notice that the formula for calculating cruising time elasticity with that of  curb parking price is stated below:

E = - p/(m-p)

E = -5/12-5

E = -5/7

=-0.714

The above elasticity states that by raising the curb parking price by 10% reduces the time drive are willing to cruise by only 7.1%

Now,

The new elasticity  = -7/(10-7)

=-7/3

=-2.33 or 2.33%

It suggests that the increase of curb pricing would make elasticity greater that shows that curb park pricing by 1% reduces the drivers that are willing to cruise by only 2.3 %

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