a) Describe the relationship between elasticity and total revenue when considering an increase in price. You are the manager of a train company. Recently total sales have been a bit low and you are now considering means to give sales a boost. Market research has shown that currently the price of train tickets is historically low. Market research has also shown that the demand curve for train tickets is downward sloping. You may assume that your company is not a price taker on the market. b) One of your colleagues has suggested that it is important to lower the price of train tickets. In that case, she argues, the demand will increase. Do you Explain with her? agree why. c) She continues her argument by concluding that if the demand goes up, the total value of sales of train tickets should therefore increase. Do you agree with Explain her? why.

a) Describe the relationship between elasticity and total revenue when considering an increase in price. You are the manager of a train company. Recently total sales have been a bit low and you are now considering means to give sales a boost. Market research has shown that currently the price of train tickets is historically low. Market research has also shown that the demand curve for train tickets is downward sloping. You may assume that your company is not a price taker on the market. b) One of your colleagues has suggested that it is important to lower the price of train tickets. In that case, she argues, the demand will increase. Do you Explain with her? agree why. c) She continues her argument by concluding that if the demand goes up, the total value of sales of train tickets should therefore increase. Do you agree with Explain her? why.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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