If Most Passenger Trains Operate Far Below Full Capacity and Demand

question 207

Multiple Choice

If most passenger trains operate far below full capacity and demand is ____, reducing travel fares would be likely to increase total revenue.

• A)​inelastic
• B)​unit elastic
• C)​unit inelastic
• D)​elastic

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Definitions:

Sensitivity Analysis

A technique used to determine how different values of an independent variable affect a particular dependent variable under a given set of assumptions.

Fixed Costs

Expenses that do not change with the amount of goods or services produced, such as rent, salaries, or insurance.

Variable Cost

Costs that change in proportion to the goods or services that a business produces.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by summing the present values of all cash inflows and outflows associated with the investment.