Figure 16-6 Watanabe Sensei Operates the Only Martial Arts School in Hartfield

question 249

Multiple Choice

Figure 16-6

Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve.
-Refer to Figure 16-6.If Sensei charges the competitive price for his classes, what is the maximum amount of admission fee that he can collect from his customers?

• A)the area A + B
• B)the area A + B + C + D
• C)the area A + B + C + D + E
• D)the area A + C + D + G + H

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Definitions:

MPC

A measure of the rate at which consumers are likely to spend additional income, rather than save it.

APS

Average Propensity to Save; the proportion of income that an individual or population saves rather than spending on consumption.

Consumption Function

As income rises, consumption rises, but not as quickly.

John Maynard Keynes

A British economist whose theories on government intervention in economies (Keynesian economics) have greatly influenced modern macroeconomic policies, particularly regarding the use of fiscal and monetary measures.