Question

The city bus system charges lower fares to senior citizens than to other passengers. Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a(n) ________ for bus service than other passengers.

Answer 1

The city bus system charges lower fares to senior citizens than to other passengers. Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a(n) More elastic  Demand for bus service than other passengers.

Explanation:

Elasticity of demand defines relationship between the change in price and the purchases made by the consumer .

In case with the increase or decrease of the price the purchasing habit of the consumer remains the same then we say that the good has inelastic demand .

In case the consumer changes its purchasing habits with the change in price of the product or service  then we say that the good /service has elastic demand.

In the question we can see that the bus service provider have changed the price of the tickets(reduce the price of the ticket) for senior citizens ,so we can say that the with the change in the price of the tickets the demand for the tickets by senior citizen must have increased .Hence it is a example of Elastic demand.