Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues.The Interior Department must believe that
A)park goers are very responsive to price changes.
B)the demand for park services is elastic.
C)the percentage increase in fees will be greater than the percentage decrease in the number of park visitors.
D)demand is unitary elastic,and thus the number of visitors will NOT decrease.

Question

Quizplus · Accepted Answer

The Interior Department is likely assuming that the percentage increase in fees will be smaller than the percentage decrease in the number of park visitors, meaning that the overall increase in revenue from entrance fees will still be positive. This assumes that demand is fairly elastic, as park goers will be sensitive to price changes and may choose to visit other parks or destinations if the fees become too high.

Interior Department Recently Announced That It Will Increase the Entrance