Consider the market for airlines and assume that it is a perfectly competitive market. Assume the U.S. domestic market is currently at equilibrium with a total of 642 million ticketed passengers per year at a price of $375 per ticket. Suppose a study is released that documents large nergative health effects of increased exposure to radiation from flying. In addition, suppose there is a sudden increase in the price of jet fuel.
(1) If demand is elastic, is the total revenue higher or lower?