Assume a Person Reveals the Following Demand Conditions

question 18

Multiple Choice

Assume a person reveals the following demand conditions.At a price of $10,quantity demanded is zero; and at a price of $1,quantity demanded is 10 units.

• A)The consumer surplus will be zero at a price of $10.
• B)Demand decreases as the price decreases.
• C)The lower the price the smaller the consumer surplus.
• D)The consumer surplus is zero at a price of $1.
• E)The consumer surplus will be the area under the entire demand curve.

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Definitions:

Marginal Revenue

The additional revenue that a business earns from selling one more unit of a good or service.

Market Price

The ongoing cost at which an asset or service is available for buying or selling in a specific market.

Microchips

Small semiconductor devices that contain an integrated circuit, used in various electronic applications.

Price Effect

The impact on consumer demand and market supply when the price of a product changes, influencing the quantity bought and sold.