A Decrease in the Demand for Peanut Butter,a Normal Good,can

question 45

Multiple Choice

A decrease in the demand for peanut butter,a normal good,can be caused by a/an:

• A)decrease in consumer income.
• B)increase in the price of jams and preserves.
• C)decrease in the price of bread.
• D)drought in Queensland that destroyed 30 per cent of the peanut crop.
• E)decrease in the price of sliced ham.

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Definitions:

Efficiency Loss

Reductions in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service. Also called deadweight loss.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is not achievable.

Actual Production

The quantity of goods or services produced by a firm, industry, or economy within a specific period, factual and not estimated.

Consumer Surplus

The variance between what consumers are ready and capable of spending on a product or service and the actual sum they end up paying.