Asked by Emilee Wagner on May 21, 2024
Verified
A study of mass-transit systems in American cities revealed that in the long run, revenues generally decline after substantial fare increases. This would suggest that
A) the demand for mass transit is price-elastic in the long run.
B) the demand for mass transit is price-inelastic in the long run.
C) mass-transit service deteriorates in the long run as price rises.
D) there are few good substitutes for such systems in urban areas.
Price-Elastic
A characteristic of goods or services for which their demand or supply significantly changes with small changes in price.
Mass Transit
Public transportation systems designed to move large numbers of people efficiently via buses, trains, subways, and other modes of transport.
- Understand the contrast in elasticity between demand across short-run and long-run spans.
- Analyze demand elasticity in the context of public transportation and mass-transit systems.
Verified Answer
JN
Jamie NoonooMay 27, 2024
Final Answer :
A
Explanation :
The demand for mass transit is price-elastic in the long run, meaning that as prices increase, the percentage decrease in quantity demanded is greater than the percentage increase in price, leading to a decline in total revenue.
Learning Objectives
- Understand the contrast in elasticity between demand across short-run and long-run spans.
- Analyze demand elasticity in the context of public transportation and mass-transit systems.