Suppose That Chris Had Been Charging $1

question 90

Multiple Choice

Suppose that Chris had been charging $1.00 per pound for potatoes. When Chris lowered the price to $0.90 per pound, his total revenue fell. When Chris raised the price to $1.10, total revenue also fell. Which of the following could explain this?

• A)$1.00 is the equilibrium price for potatoes.
• B)At 90 cents, there is excess demand for potatoes.
• C)$1.10 is more than Chris's customers' reservation prices.
• D)The price elasticity of demand for potatoes is 1 at a price of $1.00 per pound.

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Definitions:

Trade

The exchange of goods and services between individuals or entities, typically in an attempt to benefit from differences in cost or value.

Trade-off

A situation that involves losing one quality, aspect, or amount of something in return for gaining another quality, aspect, or amount.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two or more goods given a set of inputs, representing the trade-offs of producing one good over another.

Constant Rate

A fixed or unchanging value or pace at which a particular variable or condition progresses over time.