If City Officials Expect That an Increase in Bus Fares

question 152

Multiple Choice

If city officials expect that an increase in bus fares will raise mass transit revenues,they must think that the demand for bus travel is _____

• A)elastic.
• B)unit elastic.
• C)inelastic.
• D)upward-sloping.
• E)perfectly elastic.

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Definitions:

Financial Distress

A condition when a company cannot generate sufficient revenues or income, making it unable to meet its financial obligations.

Tax-Deductible

A tax-deductible expense is one that can be subtracted from gross income to arrive at taxable income, effectively reducing the overall amount of taxes owed.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, influenced by the proportion of fixed costs in a company's cost structure.

Financial Leverage

Leveraging debt to boost the potential yield of an investment.