The bus company in Detroit found that when it reduced its price in order to get more people to use the bus-and more people did-the bus company's total revenue still remained the same. Why did they get this surprising result?
A) The demand curve was horizontal, reflecting a price elasticity of zero.
B) The demand curve was vertical, reflecting a price elasticity of zero.
C) The demand curve shifted to the right.
D) The price elasticity within the range of price-before-the-cut and price-after-the-cut was unit elastic.
E) The price cut was insufficient. A deeper cut would have increased total revenue.
Correct Answer:
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