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A city has built a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion?

Respuesta :

Answer:

in the inelastic portion of the demand curve,

Explanation:

Demand is inelastic if a change in price has little or no effect on quantity demanded.

If the government increases price of toll when demand is inelastic, there would be little or no change in quantity demanded and as a result, total revenue would rise.

Demand is elastic when a change in price leads to a greater change in quantity demanded.

If the government increases price of toll when demand is elastic, the quantity demanded would fall and total revenue falls.

Demand is unit elastic when a change in price has an equal erfect on quantity demanded.

If the government increases price of toll when demand is unit elastic, quantity demanded would change in equal proportional to change in price and there would be no change in total revenue.

I hope my answer helps you

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