You are in charge of the local city-owned aquatic center.You need to increase the revenue generated by the aquatic center in order to meet expenses.The mayor advises you to increase the price of a day pass.The city manager recommends reducing the price of a day pass.You realize that
A) the mayor thinks demand is elastic, and the city manager thinks demand is inelastic.
B) both the mayor and the city manager think that demand is elastic.
C) both the mayor and the city manager think that demand is inelastic.
D) the mayor thinks demand is inelastic, and the city manager thinks demand is elastic.

Question

Quizplus · Accepted Answer

The mayor's suggestion to increase the price of a day pass indicates that they believe demand for the aquatic center is inelastic, meaning that people will still be willing to pay the higher price. However, the city manager's suggestion to reduce the price implies that they believe demand is elastic, meaning that a lower price will attract more customers and increase revenue. Based on this, it is likely that demand is somewhere between perfectly elastic and perfectly inelastic, and a more moderate price increase or decrease may be necessary to find the optimal pricing point that maximizes revenue.

You Are in Charge of the Local City-Owned Aquatic Center