The year is 2007, and the price elasticity of driving on the Dulles Toll Road is 1.6. The owners of the Dulles Toll Road raise the cost of a one way trip to $8.50. The revenue from the toll increase is not as large as the owners forecasted. Should they have set a lower or higher toll?
Higher, because demand is elastic
Lower because demand is inelastic
Lower, because demand is elastic
Higher, because demand is inelastic.
The solution determines the road elasticity for Dulles Toll Road.