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26 May, 04:13

A transit company charges $1.25 per ride and currently averages 27,500 riders per day. The company needs to increase revenue but found that for each $0.10 increase in fare the company would lose 1000 riders. What should the company charge to maximize revenues?

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  1. 26 May, 04:28
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    Charge the additional $0.10 even if you loose 1000 riders

    Step-by-step explanation:

    Original:

    27,500 x $1.25 = $34,375

    Charge additional $0.10 but loose 1000 riders:

    (27,500 - 1000) x ($1.25 + $0.10)

    26,500 x $1.35 = $35,775
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