If the demand function for city bus rides is P = 100 - 10Q and the present price of a ride is 50, then
A)Raising prices will increase city revenue
B)Raising prices will decrease city revenue
C)Raising prices will not change city revenue
D)From the information given it is not clear what would happen to city revenue if price is increased

Question

Quizplus · Accepted Answer

According to the demand function, as the price of a ride increases, the quantity demanded decreases. So, if the city raises the price of a bus ride from 50, the quantity demanded will decrease, leading to a decrease in city revenue. This means that raising prices will decrease city revenue.

If the Demand Function for City Bus Rides Is P