If most passenger trains operate far below full capacity and demand is _____, a decrease in travel fares would likely increase total revenue.
A)inelastic
B)unit elastic
C)perfectly elastic
D)elastic
E)perfectly inelastic

Question

Quizplus · Accepted Answer

If demand for train travel is elastic, a decrease in fares would result in a greater increase in quantity demanded, leading to an overall increase in total revenue. This is because the increase in quantity demanded would offset the decrease in fares, resulting in a net gain in revenue.

If Most Passenger Trains Operate Far Below Full Capacity and Demand