IT'S CALLED ELASTICITY OF DEMAND. A look at zone pricing in the early days of railroading.

[Hungarian Transport Minister Baross Gábor] argued that the loss from price cuts will be more than made up by the extra income from boosted traffic numbers. This revolutionary idea was a mirror image of one argument for tax cuts used by neolibs today, that economic growth will raise tax revenues back to the old level: instead of counting on the sustained success and goodwill of the richest, it was counting on the poorest to go trying their luck on now affordable trains.

It's also a test of the idea called price elasticity of demand. (Skip past all the calculations, they're a waste of your time, and focus on the intuition.)

A good economist is not just interested in calculating numbers. The number is a means to an end; in the case of price elasticity of demand it is used to see how sensitive the demand for a good is to a price change. The higher the price elasticity, the more sensitive consumers are to price changes. A very high price elasticity suggests that when the price of a good goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more. A very low price elasticity implies just the opposite, that changes in price have little influence on demand.

A high price elasticity implies, more precisely, that at the lower price, buying expands more than proportionately to the lower price, and total revenues increase. Small price decreases demonstrably bring in many more buyers to long-distance telephone companies, economy air carriers, discount superstores, and evidently the Hungarian suburban lines.

The supply-side tax cut relies on a somewhat more subtle argument in which the substitution effect of the tax cut more than offsets the income effect, such that net sellers of labor offer to work more hours.