A metropolitan transport authority estimates that the price elasticity of demand (PED) for peak-time commuter rail travel is -0.12, while the PED for off-peak leisure rail travel is -1.25.
Which one of the following is the most likely explanation for the highly inelastic demand during peak hours?
Commuters have rigid working hours and face severe peak-hour road congestion, resulting in a lack of viable alternative modes of transport.
Peak-time rail tickets represent a significantly larger proportion of consumer income than off-peak tickets.
Off-peak travelers are heavily influenced by advertising and promotional discounts offered by the rail operator.
Rail travel acts as an inferior good during peak times and a Giffen good during off-peak times.
256 exam-style questions on AQA A Level Economics 1.3 Price determination in a competitive market, covering 1.3.1 The determinants of the demand for goods and services, 1.3.2 Price, income and cross elasticities of demand, 1.3.3 The determinants of the supply of goods and services, 1.3.4 Price elasticity of supply, 1.3.5 The determination of equilibrium market prices, and 1.3.6 The interrelationship between markets. Each one has a worked solution and a mark scheme showing where the marks go.