An expansionary fiscal policy is used to close an inflationary gap

When a firm practices perfect price discrimination,

a. Consumer surplus is maximized b. Producer surplus is minimized c. Producer surplus is maximized d. None of the above

One group of people uses New York City subways only during rush hour to travel to and from work. Another group uses them only in midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?

a. The rush-hour group because its demand for subway service is more elastic than that of the midday group. b. The rush-hour group because its demand for subway service is less elastic than that of the midday group. c. The midday group because its demand for subway service is more elastic than that of the rush-hour group. d. The midday group because its demand for subway service is less elastic than that of the rush-hour group. e. It doesn't matter because both groups have the same elasticity of demand.