Use the Following to Answer Questions

question 241

Multiple Choice

Use the following to answer questions:
Figure: Basic Supply and Demand
-(Figure: Basic Supply and Demand) In the diagram, the market price is stable only at a price of:

• A) $2.
• B) $3.
• C) $4.
• D) $50.

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Definitions:

Market Power

Refers to the ability of a company or firm to raise and maintain prices above the level that would prevail under competition.

Raise Price

The action of increasing the cost at which goods or services are sold, often to reflect increased costs or to improve profit margins.

Broadly Defined

Describes something that is regarded or classified in a very general and inclusive manner.

Substitutes

Goods or services that serve as alternatives to each other, where a rise in the price of one results in a higher demand for the other.