Calculate the price elasticity of demand

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Reference no: EM13898462

The Acmeville Metropolitan Bus Service currently charges $0.67 for an all-day ticket, and is used by an average of 513 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must therefore find a way to increase revenues. The bus company is considering increasing the ticket price to $0.89. The marketing department's studies indicate this price increase would reduce usage to 236 riders per day. Calculate the price elasticity of demand for bus tickets to determine if the bus company should increase price or decrease price to increase revenues.

Reference no: EM13898462

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