Suppose you are the city manager of a small Midwestern city. Your city-owned bus system is losing
Question:
Suppose you are the city manager of a small Midwestern city. Your city-owned bus system is losing money, and you have to find a way to take in more revenue.
Your staff recommends raising bus fares, but bus riders argue that reducing bus fares to attract new riders would increase revenue. You conclude that
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a. your staff thinks that the demand for bus service is elastic whereas the bus riders think that demand is inelastic.
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b. your staff thinks that the demand for bus service is inelastic whereas the bus riders think that demand is elastic.
c. both your staff and the bus riders think that the demand for bus service is elastic.
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d. both your staff and the bus riders think that the demand for bus service is inelastic.
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e. both your staff and the bus riders think that the demand for bus service is unit elastic.
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