In Many Large American Cities It Is Common to Witness

question 32

Essay

In many large American cities it is common to witness private motorists pulling up to municipal bus stations and allowing perfect strangers to ride into downtown with them in order to take advantage of the high occupancy vehicle lanes that require two or more drivers. Using the concept of elasticity of demand and total revenue explain why public transit authorities might be concerned with this practice.

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Definitions:

Breaking Even

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Monopolistic Competitor

A firm in a market structure where many companies sell products that are similar but not identical, allowing for some control over prices.

Monopolistic Competitors

Companies in a market where many sellers offer products that are similar but not identical, giving each some degree of market power.

Small Companies

Businesses with a smaller scale of operations, employee base, and market presence, often characterized by lower revenues than larger corporations.