The Executive Director of New Jersey Transit Was Quoted as Saying,"We

Multiple Choice

The executive director of New Jersey Transit was quoted as saying,"We have a rule of thumb-for each 1 percent fare hike,we lose 0.2 percent of our ridership." From his statement we could assume that

A) fare increases will increase New Jersey Transit's operating revenue.
B) demand for transit service will go up as fares increase.
C) demand is price elastic.
D) a 10 percent fare hike will produce a 20 percent reduction in ridership.
E) the price elasticity coefficient is 5.