The Exhibit Illustrates Two Possible Demand Curves for a Product

question 218

Multiple Choice

The exhibit illustrates two possible demand curves for a product, D₁ and D₂. Which of the following is true regarding these demand curves?

• A) Demand curve D₁ represents a demand curve that is relatively more elastic than demand curve D₂.
• B) Demand curve D₁ represents a demand curve that is relatively more inelastic than demand curve D₂.
• C) Demand curve D₁ represents a demand curve that shows consumer purchases being more responsive to a change in the price of the good than demand curve D₂.
• D) Both are examples of unitary elastic demand curves.

---

Definitions:

Average Product

Average product is the output produced per unit of input, calculated by dividing total production by the number of units of input.

Marginal Product

This is the additional output resulting from one more unit of a given input, keeping all other inputs constant.

Labor Employment

The process or state of engaging individuals in work or activities that require the use of their skills and labor in return for payment.

Productivity

The measure of the efficiency of production, often expressed as the ratio of output to inputs used in the production process.