Exhibit 5-9 -Refer to Exhibit 5-9. When Price Is P2, Consumer Surplus

question 47

Multiple Choice

Exhibit 5-9
-Refer to Exhibit 5-9. When price is P2, consumer surplus is the numbered area

• A) 2 + 3 + 4.
• B) 1 + 2 + 3 + 4.
• C) 1.
• D) 2 + 3 + 4 + 5.
• E) 1 + 6.

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Definitions:

Perfectly Inelastic

Describes a situation where the demand for a good does not change in response to a change in price.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, defined as the percentage change in quantity demanded divided by the percentage change in price.

Demand Curve

A diagram displaying the connection between a product or service's price and the amount requested over a specified timeframe.

Price Elasticity

A gauge of the responsiveness of the amount of a product desired to alterations in its cost, reflecting demand's sensitivity to changes in price.