Consider a Market in Which Price Is Initially $2 and Rises

question 67

Multiple Choice

Consider a market in which price is initially $2 and rises to $6. If we know total revenue fell as a result of this price change, then we also know that the _____ effect outweighed the _____ effect, and the market is more likely to be represented by _____.

• A) price; quantity; Graph A
• B) quantity; price; Graph A
• C) price; quantity; Graph B
• D) quantity; price; Graph B

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Definitions:

Price Level

A measure indicating the average price of goods and services in an economy, often compared over time to assess inflation or deflation.

Inflation

The rate at which the cost of goods and services goes up, thereby reducing the purchasing capacity.

Period

A length or portion of time.

Unemployed Workers

Individuals of working age who are without work, available to work, and actively seeking employment.