Perform the Indicated Operation

question 94

Essay

Perform the indicated operation. Reduce your answer to lowest terms.

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Definitions:

Marginal Benefit

The maximum price a consumer will be willing to pay for an additional unit of a product. It is the dollar value of the consumer’s marginal utility from the additional unit, and therefore it falls as consumption increases.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen over others.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually do pay.

Price Elasticity

The determination of how price alterations influence the market demand for a commodity.