Information about the elasticity of demand

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You are responsible for running the Speedy Bus Company and have information about the elasticity of demand for bus travel: The own-price elasticity is -1.4 at the current price. A friend who works in the competing railway company also tells you that she has estimated the cross-price elasticity of train-travel demand with respect to the price of bus travel to be 1.7.

  1. As an economic analyst, would you advocate an increase or decrease in the price of bus tickets if you wished to increase revenue for Speedy?
  2. Would your price decision have any impact on train ridership?

Reference no: EM131239531

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