If most passenger trains operate far below full capacity and demand is ____, reducing travel fares would be likely to increase total revenue.
A)inelastic
B)unit elastic
C)unit inelastic
D)elastic
E)perfectly inelastic

Question

Quizplus · Accepted Answer

If demand is elastic, then reducing travel fares would result in a larger increase in the quantity demanded compared to the decrease in price. Therefore, the total revenue would increase, even if the trains operate below full capacity.

If Most Passenger Trains Operate Far Below Full Capacity and Demand