The Aggregate Demand for Good X Is Q = 20

question 118

Multiple Choice

The aggregate demand for good X is Q = 20 - P. If the price rises from P = $4 to P = $5, what is the change in consumer surplus?

• A) $4.50
• B) $5.50
• C) $15.50
• D) $16

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Definitions:

Consumer Price Index

An index that measures the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.

Substitutes

Products that serve similar purposes. An increase in the price of one will cause an increase in demand for the other (examples are hamburgers and tacos, butter and margarine, Chevrolets and Fords).

Cable TV

is a system of delivering television programming to consumers via radio frequency signals transmitted through coaxial cables.

Satellite TV

A television system that delivers programming to viewers by broadcasting from a communications satellite orbiting the Earth directly to the viewer's location.