If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is:
A) elastic.
B) unit elastic.
C) inelastic.
D) perfectly inelastic.
E) 10.

Question

Quizplus · Accepted Answer

If New York City expects that an increase in bus fares will raise mass transit revenues, it implies that the demand for bus travel is inelastic. This is because, with inelastic demand, the percentage change in quantity demanded is less than the percentage change in price, leading to an increase in total revenue when prices rise.

If New York City Expects That an Increase in Bus