If in the short run the demand for mass transit is inelastic and in the long run the demand is elastic, then a price
A)increase will decrease total revenue in the short run but increase total revenue in the long run.
B)increase will increase total revenue in the short run but decrease total revenue in the long run.
C)decrease will increase total revenue in the short run but decrease total revenue in the long run.
D)decrease will decrease total revenue in the short run and decrease total revenue in the long run.

Question

Quizplus · Accepted Answer

When demand is inelastic, a price increase leads to a smaller percentage decrease in quantity demanded, thus increasing total revenue. Over the long run, as demand becomes elastic, a price increase causes a larger percentage decrease in quantity demanded, reducing total revenue.

If in the Short Run the Demand for Mass Transit