"As the Price of Personal Computers Continues to Fall,demand Increases

question 117

Multiple Choice

"As the price of personal computers continues to fall,demand increases." This headline is inaccurate because

• A) a change in the price of personal computers shifts the demand curve.
• B) a change in the price of personal computers shifts the supply curve.
• C) the statement is backwards: increased demand leads to lower prices.
• D) falling prices of personal computers increase quantity demanded,not demand.
• E) falling prices of personal computers increase quantity supplied.

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Definitions:

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product or service, an important concept in economics for decision making.

Variable Input

An input in the production process that can be adjusted in the short term to change the level of output.

Industry Supply Curve

A graphical representation that shows the relationship between the price of a good and the total output of that good by all firms in the industry.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good varies as production volume changes.