When the Price of a Pound of Apples Is $1

question 245

Multiple Choice

When the price of a pound of apples is $1.00, 7500 pounds of apples are demanded. When the price of a pound of apples decreases to $0.80, 10,000 pounds of apples are demanded. In this price range the demand for apples is

• A) elastic.
• B) inelastic.
• C) unit elastic.
• D) perfectly elastic.

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Definitions:

Homogeneous Products

Goods that are essentially identical, offered by different sellers within a market.

First-mover Advantage

The competitive advantage gained by the initial ("first-moving") significant occupant of a market segment.

Bertrand Duopoly

A market structure in which two companies compete on price, each setting their price independently with the aim of maximizing profit, assuming the competitor's price is fixed.

Homogenous Products

Goods that are identical in features and quality, making them indistinguishable to consumers from those offered by competing suppliers.