ECO100Y1 Lecture Notes - Lecture 4: Toronto Transit Commission, Demand Curve, Royal Ontario Museum
Document Summary
Elasticity of demand (price) elasticity of demand quantity. In response to an increase in price, total revenue: Inelastic demand curve (tr if p ) In this case, revenue increase exceeds revenue decrease, so total revenue rises as price increases. Two opposing forces when there is an increase in price: revenue increases because contiuning customers pay the higher price, revenue decreases because some customers will not pay the higher price. For an inelastic demand curve, 1 is greater than 2. For an elastic demand curve, 2 is greater than 1. 1 you own: ttc (toronto transit commission, 1 of 10 toll bridges across a river. For most users, there are few close substitutes [cars, for example, are too expensive to park] Demand is inelastic, so raise price [fare: toll bridge. There are 9 close substitutes, so demand is elastic. Do not raise price, since total revenue will fall. News: (cid:862)rom lowers prices to attract more visitors(cid:863)
