A Public Transit Company Finds That When It Reduces the Price

question 137

Multiple Choice

A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:

• A) the demand curve is horizontal, reflecting infinite price elasticity.
• B) if the price is lowered further total revenue will increase.
• C) the demand curve for bus tickets must have shifted to the right.
• D) the firm is operating in a range of the demand curve that is unit elastic.

---

Definitions:

Compliance

The act of conforming, submitting, or adapting one's behavior to match with demands, requests, or regulations from others, often used in a legal or regulatory context.

Lowball Procedure

The lowball procedure is a psychological technique used in persuasion and sales where an initially favorable offer is made, only to have terms less favorable to the buyer introduced later.

Expensive Extra Equipment

Items or tools that are not included with the basic package of a product and are often high in price.

Test Drive

A trial use of a car before purchase, allowing potential buyers to experience the vehicle's performance, features, and suitability for their needs.