If city officials expect that an increase in bus fares will raise mass transit revenues,they must think that the demand for bus travel is _____
A)elastic.
B)unit elastic.
C)inelastic.
D)upward-sloping.
E)perfectly elastic.

Question

Quizplus · Accepted Answer

If city officials expect that an increase in bus fares will raise mass transit revenues, it means that they expect people to continue using buses even after the fare hike. This suggests that the demand for bus travel is relatively inelastic, as a change in price is not expected to significantly impact the quantity demanded. If the demand for bus travel were elastic, then an increase in prices would likely result in a significant decrease in the quantity demanded, thereby reducing transit revenues.

If City Officials Expect That an Increase in Bus Fares