Question

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be

A. inelastic.
B. perfectly elastic.
C. elastic.
D. unit elastic.

Answer 1

Inelastic

Step-by-step explanation:

Price elasticity is degree of responsiveness of demand to changes in price. The laws of demand states when price is elastic an increase in price will result in decrease in amount demanded, while a decrease in price will result in increase in quantity demanded.

In this case as price increases demand does not reduce indicating that demand is inelastic (not responsive to price).