Airlines that try to lower fares in order to increase revenue must believe that the demand for airline service is
A)price inelastic.
B)income elastic.
C)income inelastic.
D)price elastic.
E)cross-price elastic.

Question

Quizplus · Accepted Answer

When demand is price elastic, lowering prices leads to a proportionally larger increase in the quantity demanded, which can increase total revenue. This is why airlines would lower fares, expecting more people to fly due to the lower prices.

Airlines That Try to Lower Fares in Order to Increase