If Consumers Are Not Price Sensitive in Purchasing a Consumer

question 52

Multiple Choice

If consumers are not price sensitive in purchasing a consumer product such as Smucker's Jams,a 10% increase in the retail price of strawberry jam because of a 10% increase in the cost of strawberries from farmers will not affect demand for jam.Thus,the derived demand indicates that the demand for strawberries is:

• A)Elastic
• B)Inelastic
• C)unpredictable
• D)Unknown
• E)none of the above

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Definitions:

Economies of Scale

The cost advantage achieved by an enterprise when production becomes efficient, as costs can be spread over a larger amount of goods.

Market Demand

The total quantity of a good or service that all consumers are willing and able to purchase at various prices during a given period.

Nondiscriminating Pure Monopolist

A monopolist who sells their product at the same price to every customer, not charging different prices to different buyers.

Industry Demand Curve

A graph showing the relationship between the price of a good and the total amount of the good all consumers are willing to purchase within a specific industry.