In the Wake of the 2008 Recession, the Electronics Retailer

question 65

Multiple Choice

In the wake of the 2008 recession, the electronics retailer Circuit City closed its stores. If we assume this was a short-run decision, the most likely explanation for it is that the price of a typical product sold at Circuit City stores was:

• A) greater than the average total cost of producing the toy.
• B) equal to the average total cost of producing the toy.
• C) less than the average total cost of producing the toy but greater than the average variable cost.
• D) less than the average variable cost of producing the toy.

---

Definitions:

Law of Demand

An economic principle that states the inverse relationship between the price of a good or service and the quantity demanded.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to buy at a specific price.

Price

The amount of money expected, required, or given in payment for something.

Demand Curves

Graphical representations that depict the relationship between the price of a product and the quantity of that product consumers are willing to purchase at various price points.