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Suppose a subway line determines it can charge different prices to riders during rush hour and...

Suppose a subway line determines it can charge different prices to riders during rush hour and riders who travel on the weekend or during off-peak hours. The subway line’s goal is to increase total revenue. The price elasticity of demand for riders during rush hour is -0.80, and the price elasticity of demand for off-peak travelers is -2.70. Based on the price elasticity of demand for each group of people, how should the subway line adjust its prices?

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Raise the price during rush hour as price elasticity of demand is inelastic (-0.80) and decrease the price for off peak travelers as price elasticity of demand is elastic. (-2.70)

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