A city wants to raise revenues to build a new municipal swimming pool next year.The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues.The city manager suggests that the city lower the price of admission to raise revenues.Who is correct?
A)Both the mayor and city manager would be correct if demand were price elastic.
B)Both the mayor and city manager would be correct if demand were price inelastic.
C)The mayor would be correct if demand were price elastic;the city manager would be correct if demand were price inelastic.
D)The mayor would be correct if demand were price inelastic;the city manager would be correct if demand were price elastic.

Question

Quizplus · Accepted Answer

If demand is price inelastic, raising prices will increase total revenue. If demand is price elastic, lowering prices will increase total revenue.

A City Wants to Raise Revenues to Build a New