If the Price of a Good Is Zero, a Rational

question 323

Multiple Choice

If the price of a good is zero, a rational consumer will

• A) buy all of the units available.
• B) not consume the good at all since it must not be valuable if it has a zero price.
• C) stop consuming the good when total utility is maximized.
• D) consume the good up to the point where total utility is just below zero.

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Definitions:

Crop

A cultivated plant that is grown on a large scale commercially, especially a cereals, fruit, or vegetable.

Demand

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

Agricultural Commodities

Raw products derived from farming, ranching, and forestry which are traded on commodities markets, such as grains, livestock, and dairy products.

Income Elastic

Describes a situation where the demand for a good or service changes in response to changes in consumers' income levels.