The Local Public Transportation System Recently Raised Rates and Was

question 65

Multiple Choice

The local public transportation system recently raised rates and was surprised to be faced with declining revenue. What can be accurately concluded?

• A)The cross-price elasticity of demand for public transportation is less than 1.
• B)The demand for public transportation is inelastic.
• C)The income elasticity of demand for public transportation is greater than 1.
• D)The demand for public transportation is elastic.
• E)The demand curve for public transportation has a positive slope.

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Definitions:

Expected Rate

Expected rate often refers to the anticipated return on an investment or the predicted growth rate of an economic variable over a certain period.

Optimal Amount

The most efficient, beneficial, or ideal quantity of a good, service, or resource allocation under given circumstances.

Perfectly Elastic

Describes a situation in economics where the quantity demanded or supplied changes infinitely in response to any change in price.

Interest-Rate Cost-Of-Funds

The cost incurred by financial institutions to raise funds that they can then lend to customers, influenced by prevailing interest rates.