If the Turnpike Commission is correct in its estimate of the price elasticity of demand,turnpike revenue will
A) rise initially, then fall.
B) fall initially, then rise.
C) not change.
D) rise.
E) fall.

Question

Quizplus · Accepted Answer

If the Turnpike Commission's estimate of the price elasticity of demand is correct, and they are adjusting prices based on this understanding, it implies they are making changes to maximize revenue. This typically means they have identified a price point where the change in demand will not proportionally offset the change in price, leading to an increase in revenue.

If the Turnpike Commission Is Correct in Its Estimate of the Price