At a Price of $5, Sam Buys 10 Units of a Product;

question 277

Multiple Choice

At a price of $5, Sam buys 10 units of a product; when the price increases to $6, Sam buys 8 units. Martha says Sam's demand has decreased. Is Martha correct?

• A) Yes, Martha is correct. Sam's demand has decreased.
• B) No, Martha is incorrect. Sam's demand has increased.
• C) No, Martha is incorrect. Sam's quantity demanded has decreased, and his demand has not changed.
• D) No, Martha is incorrect. Sam's quantity demanded has increased, and his demand has increased.
• E) No, Martha is incorrect. Sam's demand has increased, and his quantity demanded has decreased.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good which consumers are willing to purchase at various prices.

Cost Function

A mathematical representation that describes how the costs incurred by a firm relate to its level of output or production.

Cartel Arrangement

An agreement among competing firms to control prices or exclude entry of new competitors in a market, often to maximize their profits illegally.

Manufacturing Plant

A facility where raw materials are transformed into finished products through various processes and machinery, typically involving assembly lines and specialized equipment.