-The Increase in the Demand for Widgets, Shown in the Figure

question 298

Multiple Choice

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices from $9 to $11. Therefore, the cross-price elasticity for these two products is

• A) -2.0.
• B) -0.5.
• C) 0.5.
• D) 2.0.

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Definitions:

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund public expenditure.

Consumer Surplus

The difference between the aggregate willingness to pay by consumers for a good or service and the aggregate actual payment.

Deadweight Loss

An economic inefficiency caused by a disruption in market equilibrium, leading to a loss of societal welfare.

Consumer Surplus

The disparity between the ideal total expenditure consumers are willing to make on a good or service and the real expenditure.