If the managers of a bus system find that revenues increase when fares are raised, they would conclude that price elasticity demand for a subway service is inelastic.

Question

Quizplus · Accepted Answer

If revenues increase when fares are raised, it indicates that the demand for the service is not very sensitive to price changes, which suggests an inelastic demand. In other words, even if prices increase, people are still willing to use the service, which results in higher revenues for the bus system.

If the Managers of a Bus System Find That Revenues