The Bus Company in Detroit Found That When It Reduced

Multiple Choice

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.