One group of people uses the New York City subways only during the rush hour to travel to and from work.Another group uses them only at midday for leisure activity.If New York City wants to increase transit fares with the smallest possible reduction in revenue,for which group should it increase the fare?
A)the rush-hour group, because its demand for subway service is more elastic than that of the mid-day group
B)the rush-hour group, because its demand for subway service is less elastic than that of the mid-day group
C)the mid-day group, because its demand for subway service is more elastic than that of the rush-hour group
D)the mid-day group, because its demand for subway service is less elastic than that of the rush-hour group
E)It doesn't matter, because both groups have the same elasticity of demand.

Question

Quizplus · Accepted Answer

The rush-hour group likely has a less elastic demand for subway service because they rely on it to get to and from work, making them less sensitive to price changes compared to the mid-day group, who may have more flexible travel options for leisure activities.

One Group of People Uses the New York City Subways