The Acmeville Metropolitan Bus Service currently charges $0.99 for an all-day ticket and is used by an average of 623 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must, therefore, find a way to increase revenues The bus company is considering increasing the ticket price to $1.21. The marketing department's studies indicate this price increase would reduce usage to 473 riders per day. Calculate the price elasticity of demand using the midpoint method for bus tickets to determine if the bus company should increase price or decrease price to increase revenues. Enter your answer as an absolute value and round it to two places after the decimal price elasticity of demand: Determine if demand is elastic or inelastic and what this implies regarding how ticket prices affect revenue Demand is inelastic, so decreasing ticket prices will increase revenue Demand is inelastic, so increasing ticket prices will increase revenue increasing ticket prices will increase revenue Demand is elastic, so Demand is elastic, so decreasing ticket prices will increase revenue.

The Acmeville Metropolitan Bus Service currently charges $0.99 for an all-day ticket and is used by an average of 623 riders a day. The bus company is not earning a profit, but according to their contract with the city, they cannot cut the number of buses on the road. They must, therefore, find a way to increase revenues The bus company is considering increasing the ticket price to $1.21. The marketing department's studies indicate this price increase would reduce usage to 473 riders per day. Calculate the price elasticity of demand using the midpoint method for bus tickets to determine if the bus company should increase price or decrease price to increase revenues. Enter your answer as an absolute value and round it to two places after the decimal price elasticity of demand: Determine if demand is elastic or inelastic and what this implies regarding how ticket prices affect revenue Demand is inelastic, so decreasing ticket prices will increase revenue Demand is inelastic, so increasing ticket prices will increase revenue increasing ticket prices will increase revenue Demand is elastic, so Demand is elastic, so decreasing ticket prices will increase revenue.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter3: Demand Analysis

Section: Chapter Questions

Problem 1E: The Potomac Range Corporation manufactures a line of microwave ovens costing $500 each. Its sales...

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