A failure of the pricing system has led to pollution.

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. the company sells the same number of bus tickets both before and after the price change. 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. e. the price should be lowered further so that a larger quantity can be sold.

Consider a PPC with automobiles on the vertical axis and cotton on the horizontal axis. The discovery of a new fertilizer that improves crop yield will shift:

a. the vertical intercept up but will not shift the horizontal intercept. b. the horizontal intercept to the right but will not shift the vertical intercept. c. the horizontal intercept to the left and the vertical intercept upward. d. the vertical intercept downward and the horizontal intercept to the right. e. neither the horizontal intercept nor the vertical intercept.