Refer to the Demand Schedule and Possible Supply Schedules, A-D

question 77

Multiple Choice

Refer to the demand schedule and possible supply schedules, A-D. Suppose that the supply of a resource is given by the schedule that exhibits a zero price elasticity. If demand for the resource increases from the original demand schedule by 20 units at each price, then the equilibrium economic rent would be

• A)$4.
• B)$3.
• C)$2.
• D)$1.

---

Definitions:

Monopoly

A market structure characterized by a single seller or producer dominating the entire market, facing no competition.

Linear Demand Curve

A graphical representation that shows a straight-line relationship between the price of a good and the quantity demanded.

Profit-Maximizing

The strategy employed by a business to identify the optimum price and quantity of production for maximizing earnings.

Price-Elastic

A term that describes how sensitive the demand for a good or service is to changes in its price; high elasticity means demand changes significantly with price changes.