Asked by David Adamovich on Jun 18, 2024
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The Illinois Central Railroad once asked the Illinois Commerce Commission for permission to increase its commuter rates by 20 percent. The railroad argued that declining revenues made this rate increase essential. Opponents of the rate increase contended that the railroad's revenues would fall because of the rate hike. It can be concluded that
A) both groups felt that the demand was elastic but for different reasons.
B) both groups felt that the demand was inelastic but for different reasons.
C) the railroad felt that the demand for passenger service was inelastic and opponents of the rate increase felt it was elastic.
D) the railroad felt that the demand for passenger service was elastic and opponents of the rate increase felt it was inelastic.
Illinois Central Railroad
A historic American railroad that operated in the central United States, particularly known for its role in the development of the railway network from the Great Lakes to the Gulf of Mexico.
Demand
The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.
Elastic
A characteristic of demand or supply where a change in price leads to a significant change in the quantity demanded or supplied.
- Explain how elasticity considerations influence pricing decisions in various sectors.
Verified Answer
Learning Objectives
- Explain how elasticity considerations influence pricing decisions in various sectors.
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