You are the manager of the public transit system. You are informed that the system faces a
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Question:
You are the manager of the public transit system. You are informed that the system faces a deficit, but you cannot cut service, which means you cannot cut costs. Your only hope is to increase revenue by increasing fares. You are advised that the estimated price elasticity of demand, several years after the price change, will be about ?1.5. Select the statement that best describes the results of raising the fare in the long run.
A. total revenue rises immediately, since demand will remain price inelastic.
B. total revenue will fluctuate as the demand fluctuates.
C.Total revenue falls, since demand changes and becomes price elastic.
Related Book For
Managerial Accounting A Focus on Ethical Decision Making
ISBN: 978-0324663853
5th edition
Authors: Steve Jackson, Roby Sawyers, Greg Jenkins
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