Prices of Microbrewery Beer (Assume That This Is a Normal

question 57

Multiple Choice

Prices of microbrewery beer (assume that this is a normal good) have risen steadily in recent years.Over this same period, prices for fermenting vats used in beer making have also risen and consumer incomes have fallen.Which of the following best explains the rising prices of microbrewery beer?

• A)The supply curve for microbrewery beer has shifted to the left while the demand curve for microbrewery beer has shifted to the right.
• B)The demand curve for microbrewery beer has shifted to the left more than the supply curve has shifted to the left.
• C)The demand curve and the supply curve for microbrewery beer have both shifted to the right.
• D)The supply curve for microbrewery beer has shifted to the left more than the demand curve has shifted to the left.

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Definitions:

Price Elasticity

An evaluation of the degree to which a change in the cost of a good influences the amount of it demanded.

Total Revenue

The total receipts from sales of a given quantity of goods or services; calculated as the unit price multiplied by the number of units sold.

Elastic Portion

A segment of the demand curve where a change in price leads to a more than proportional change in quantity demanded, indicating high price sensitivity.

Price Inelastic

Describes a situation where the demand for a good or service is relatively unresponsive to changes in price.