For a Given Decrease in Demand, the Effect on Price

question 127

Multiple Choice

For a given decrease in demand, the effect on price is largest and the effect on quantity exchanged smallest when:

• A)​supply is perfectly elastic.
• B)​supply is elastic.
• C)​supply is unit elastic.
• D)​supply is perfectly inelastic.

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Definitions:

Utilitarian Justice

A principle that seeks the greatest good for the greatest number of people in the distribution of resources and benefits.

Decreasing Marginal Utility

The phenomenon where each additional unit of a good or service consumed provides less satisfaction or utility than the previous unit.

Redistribution

The transfer of income, wealth, or property from some individuals to others through a social mechanism such as taxation, welfare, public services, etc.

Income Redistribution

The transfer of income from certain individuals or groups to others through mechanisms like taxes, welfare, and public services to achieve economic equality.