Suppose an economist found that total revenues increase for the bus system when fares were raised, the conclusion is that the price elasticity demand for subway services over the range of fare increase is inelastic.

Question

Quizplus · Accepted Answer

If total revenues increase when fares are raised, it means that the increase in revenue from the higher fares outweighs the decrease in revenue from the fewer riders due to the higher fares. This suggests that the demand for subway services is inelastic, meaning that even with a price increase, customers are still willing to pay for the services.

Suppose an Economist Found That Total Revenues Increase for the Bus