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The city government is losing millions of dollars on the mass transit system (buses and subways). The government proposes to increase the fare of a
The city government is losing millions of dollars on the mass transit system (buses and subways). The government proposes to increase the fare of a ticket by 20% to raise revenue and has asked your advice. You know that the price elasticity of demand for mass transit in the city is approximately equal to -0.75. What do you think of the proposal to increase the fare to raise revenue for the city? Be as specific as possible.
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