"There Is No Such Thing as a Free Lunch

question 47

Multiple Choice

"There is no such thing as a free lunch." This statement best reflects the fact that

• A) consumers are unwilling to pay for a good unless it provides them with value.
• B) an opportunity cost is always present when scarce resources are used to produce a good.
• C) it generally requires enormous effort to search out the best place to eat lunch.
• D) the value of a good to consumers will decrease as they have more of it.

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Definitions:

Inelastic Demand

A situation where the demand for a good or service is not significantly changed by alterations in its price.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating how sensitive consumers are to price changes.

Price Discrimination

The strategy of selling the same product or service at different prices to different groups of consumers, based on their willingness or ability to pay.

Profits

The financial gain obtained when revenues from sales exceed the costs associated with production and selling the goods or services.