The Demand Curve for a Good Is Very Unlikely to Be

question 182

Multiple Choice

The demand curve for a good is very unlikely to be perfectly vertical because

• A) scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive.
• B) as the price of a good rises to high enough levels, the incentive for other suppliers to invent new substitutes for the good increases.
• C) consumers generally do not care about the price of the goods they consume.
• D) both a and b are true.

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Definitions:

Deadweight Loss

Deadweight loss refers to a loss in economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Marginal Cost

The cost of producing one additional unit of a product or service, reflecting the change in total cost that arises from an increase in production.

Socially Efficient

The optimal allocation of resources that occurs when the social welfare is maximized, accounting for all costs and benefits to society.

Price Discrimination

A strategy where a seller charges different prices for the same product or service to different customers, based on the market segment each represents.