Increase revenue to cover rising costs

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Reference no: EM132056704

The Metropolitan Transit System recently announced a 50% increase in the price of a transit ticket. The administrators said that they needed an increase in revenue to cover their rising costs. Explain the economic rationale for this decision.

The objective of the administrators is to increase revenue to cover rising costs. If they increase the price of a transit ticket to increase revenue, then the administrators must believe that the demand for transit services is ( elastic, inelastic, unit elastic) in this price range.

Reference no: EM132056704

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