Sarah and David Both Have Linear Demand Curves for Lemonade

question 62

Multiple Choice

Sarah and David both have linear demand curves for lemonade.Sarah's demand curve for lemonade intersects David's demand curve at a price of 50 cents per glass.Sarah's demand curve is more inelastic than David's.A change in the price of lemonade from 50 cents to 25 cents per glass will

• A) decrease Sarah's consumer surplus more than David's.
• B) decrease David's consumer surplus more than Sarah's.
• C) increase Sarah's consumer surplus more than David's.
• D) increase David's consumer surplus more than Sarah's.

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Definitions:

Error of Estimation

The error of estimation is the difference between a population parameter and the estimated value of that parameter, reflecting the accuracy of the estimate.

Population Standard Deviation

A measure of the dispersion or spread of the entire underlying population's values around the mean.

Confidence Level

The probability that the value of a parameter falls within a specified range of values, known as the confidence interval.

Error of Estimation

The discrepancy between a parameter's estimated value and its true value in the population.