The mayor advocates raising the entrance fee at the city's pools to increase revenue for the city.The mayor is right only if the price effect dominates the quantity effect.

Question

Quizplus · Accepted Answer

If the price effect, meaning the increase in revenue from higher entrance fees, is greater than the quantity effect, meaning fewer people may choose to use the pools due to the higher fees, then raising the entrance fee will increase revenue for the city. However, if the quantity effect is greater, then raising the entrance fee may actually decrease revenue for the city.

The Mayor Advocates Raising the Entrance Fee at the City's