The fiGure Below Shows Three Demand Curves for Coffee

question 45

Multiple Choice

The figure below shows three demand curves for coffee. An increase in the price of coffee, other factors constant, would cause a

• A) shift from D1 to D3.
• B) shift from D1 to D2.
• C) movement from point a to point b.
• D) movement from point b to point a.

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Definitions:

Elastic

Refers to the responsiveness of the quantity demanded or supplied of a good or service to a change in its price.

Excess Burden

The cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.

Tax Revenue

The income that is collected by the government through various forms of taxation.

Excess Burden

The expense incurred by society due to market inefficiency, happening when there's a mismatch between supply and demand.