Suppose We Observe That Both the Equilibrium Price of Film

question 443

Multiple Choice

Suppose we observe that both the equilibrium price of film cameras and the equilibrium quantity of film cameras have fallen. Which of the following could be responsible for this?

• A) Consumers' preferences changed in favor of digital cameras.
• B) Technological advances were made in film camera production.
• C) Workers who make cameras received a pay raise.
• D) The price of digital cameras increased.

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Definitions:

Price Discrimination

The practice of charging different people or groups of people different prices that are not cost justified.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price to each customer based on their willingness to pay, capturing all consumer surplus as profit.

Consumer Surplus

The discrepancy between what consumers are prepared and able to spend on a product or service and the actual amount they end up paying.

Producer Surplus

The difference between what producers are willing to sell a good for and the actual price they receive, serving as an indicator of producer welfare.