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A city announces a new cash fare policy that will force all passengers to pay the same $2.25 cash fare. Students and senior citizens would
A city announces a new cash fare policy that will force all passengers to pay the same $2.25 cash fare. Students and senior citizens would no longer enjoy discounted rates, except for tickets and passes.
(a) Draw and explain an appropriate model(s) that illustrates why a one fare policy is unlikely to increase revenues.
(b) Explain the model(s), and outline the pricing rules for a monopoly like Transit to maximize its revenues.
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