Chapter 5: Elasticity: A Measure of Response Notes
Subject:
Economics Chapter 5, Elasticity: A Measure of Response Notes Start Up: Raise Fares? Lower Fares? What?s A Public Transit Manager To Do? Imagine that you?re the manager of a public transportation system for a large area. Costs of operating have soared in the last few years, and you?re under pressure to boost revenue. What do you do? An obvious choice is to raise fares; that?ll make customers angry, but it will generate the extra revenue you need.. Or will it? The law of demand says that raising fares will reduce the number of passengers riding on the system. If the number falls only a little, then the higher fares that your remaining passengers pay might produce the higher revenues you need
