Of course, it all depends on how elastic the demand is and where the price is on the demand curve. Dropping the price can often result in an increase in long-term revenue, by increasing the overall number of users... less profit per user, but more users... Of course, the fact that the price of gasoline and diesel fuel has gone through the ceiling is pushing people towards public transit systems.
Quote:
Originally Posted by knothead
I remember once hearing about a municipal transit system, (buses), that was losing money.
They raised the fares and their revenue increased... for a little while.
After a couple of months, ridership decreased and revenue fell below what it was before the fares were raised.
Then they lowered the fares to an amount that was less than they were originally and revenues continued to drop... for a little while.
After a month or so ridership increased and so did their revenue.
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Sailingdog
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Telstar 28
New England
You know what the first rule of sailing is? ...Love. You can learn all the math in the 'verse, but you take
a boat to the sea you don't love, she'll shake you off just as sure as the turning of the worlds. Love keeps
her going when she oughta fall down, tells you she's hurting 'fore she keens. Makes her a home.
—Cpt. Mal Reynolds, Serenity (edited)
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