If the managers of the Miami Transit Authority (MTA) raise the fare from $2.00 to $2.25 per ride and, as a result, total revenue increases, then we know that the demand for rides is
A) price inelastic.
B) price elastic.
C) unitary elastic.
D) is perfectly elastic.

Question

Quizplus · Accepted Answer

When demand is price inelastic, an increase in price leads to an increase in total revenue because the percentage decrease in quantity demanded is less than the percentage increase in price. This means consumers are relatively unresponsive to price changes.

If the Managers of the Miami Transit Authority (MTA) Raise