You Have Been Hired by the City to Determine Whether

question 140

Essay

You have been hired by the city to determine whether or not an increase in the price of tickets for the mass transit system would raise system revenues. The debate has been heated and the city council seems to be divided. One side argues that in order to increase revenues from the transit system, prices must be increased. The opposing side argues that a price increase at this time will lower revenues. What assumptions are each side making about the price elasticity of demand, and how might you determine the best course of action?

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Definitions:

Skilled Members

Individuals within a group or organization who possess specialized knowledge, abilities, or expertise that contribute to achieving common goals.

Social Facilitation Theory

The concept that individuals perform differently when in the presence of others, often improving on well-practiced tasks and performing less well on new or difficult tasks.

Cyclists

Individuals who ride bicycles, whether for recreation, transportation, sport, or exercise.

Time Trials

Competitive events where individuals or teams race against the clock to complete a certain distance or course in the shortest possible time.