Manufacturers of Printers and Computers Set Prices Independently

question 34

Multiple Choice

Manufacturers of printers and computers set prices independently.This means that they

• A)use capital-intensive means of production.
• B)use division of labor and specialization in production.
• C)do not consider the effect of the prices on the demand for the products.
• D)do not consider the negative effect that the high prices have on each other's profit.

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Definitions:

Demand Curve

A graph that shows the relationship between the price of a good and the quantity of that good that consumers are willing to purchase.

Ceteris Paribus

A Latin phrase meaning "all other things being equal," used in economics to isolate the effect of one variable change.

Producer Surplus

The gap between what sellers are prepared to take for a product or service and the actual amount they get.

Inelastic

This refers to a lack of sensitivity in the quantity demanded or supplied when the price changes.