-The Figure Above Shows Clara's Demand for CDs

question 362

Multiple Choice

-The figure above shows Clara's demand for CDs. If the price for a CD is $15, then Clara

• A) receives no consumer surplus on the 6th CD she buys.
• B) receives a total of $10 of consumer surplus.
• C) will buy no CDs.
• D) receives a total of $40 of consumer surplus.

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Definitions:

Elastic

A characteristic of a good or service where its demand or supply changes significantly when its price changes.

Average Costs

The total costs of production (fixed and variable) divided by the total quantity of output produced.

Central Planning Model

A system of economy where all choices regarding the creation and use of goods and services are made by the government.

American Capitalism

A system marked by private property, competitive markets, economic incentives, and limited government intervention in the economy.