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

b. The elasticity of demand is the degree of responsiveness from the part of the consumer towards…

Answered: b) One of your colleagues has suggested…

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 agree with her? Explain 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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Question

question b

thx

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 agree
with her? Explain 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 her?
Explain why.

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