In most businesses, increasing prices of products can negatively impact the number of customers. A bus company in a small town has an average number of riders of 800 per day. The bus company charges $2.25 for a ride. They conducted a survey of their customers and found that they will lose approximately 40 customers per day for each $.25 increase in fare.
Makes sense to me!
What is your question? Assuming that the survey is correct, the increases will still lead to a greater daily income.
I hope this helps a little more. Thanks for asking.
Thank you for providing additional context. Based on the information you have given, it seems like you are trying to understand the impact of increasing fares on the daily income of a bus company in a small town.
To determine the effect of fare increases on daily income, you need to consider two factors: the change in the number of customers and the change in fare price.
Let's break down the information provided:
1. The average number of riders per day is 800.
2. The current fare price is $2.25 per ride.
3. According to the survey, for every $0.25 increase in fare price, the company will lose approximately 40 customers per day.
To calculate the impact on daily income, we need to determine the change in customers and the change in fare price.
First, let's calculate the change in customers. We know that for every $0.25 increase in fare price, the company will lose approximately 40 customers. Since the current fare price is $2.25, let's assume the bus company increases the fare by $0.25 to $2.50.
The increase in fare price is $2.50 - $2.25 = $0.25.
The change in customers is -40, as customers will be lost.
To determine the change in daily income, we multiply the change in customers by the fare price increase:
Change in daily income = change in customers * fare price increase
Change in daily income = -40 * $0.25 = -$10.
This means that for every $0.25 increase in fare price, the bus company will lose $10 in daily income.
Based on this calculation, it seems that increasing the fare price may not lead to a greater daily income. In fact, it indicates a loss in daily income. However, it's important to note that this calculation is based on the assumption that the survey findings are accurate and that the relationship between fare price increase and lost customers is linear.
Remember, this analysis provides a simplified understanding and there might be additional factors to consider, such as elasticity of demand and the potential impact on customers' willingness to use alternative transportation options.