A study of mass-transit systems in American cities revealed that in the long run, revenues generally decline after substantial fare increases. This would suggest that
A) the demand for mass transit is price-elastic in the long run.
B) the demand for mass transit is price-inelastic in the long run.
C) mass-transit service deteriorates in the long run as price rises.
D) there are few good substitutes for such systems in urban areas.

Question

Quizplus · Accepted Answer

The fact that revenues decline after substantial fare increases suggests that the demand for mass transit is price-elastic in the long run. This means that as prices rise, consumers will eventually seek out alternative modes of transportation, resulting in a decline in revenue for mass transit systems.

A Study of Mass-Transit Systems in American Cities Revealed That