Suppose a subway line determines it can charge different prices to riders during rush hours and riders
Question:
Suppose a subway line determines it can charge different prices to riders during rush hours and riders who travel on the weekend or during off-peak hours. The subway's line goal is to increase total revenue.
The price elasticity of demand for riders during rush hour is -.70, and the price of elasticity of demand for off-peak travelers is -2.20.
Based on the price of elasticity of demand for each group of people, how should the subway adjust its prices?
Choose One:
A. Lower the price for off-peak travelers, and keep the price the same for riders during rush hour.
B. Lower the price for off-peak travelers, and raise the price for riders during rush hour.
C. Raise the price for off-peak travelers, and keep the price the same for riders during rush hour.
D. Raise the price for off-peak travelers, and lower the price for riders during rush hour.