Refer to the Figure Below

question 85

Multiple Choice

Refer to the figure below. When P = 4, the price elasticity of demand for the demand curve D1 is ______ and D2 is ______.

• A)3; 3
• B)2/3; 1/3
• C)1/3; 3
• D)1/3; 2/3

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, typically illustrated as the area above the supply curve and below the market price.

Price Ceiling

A legally imposed limit on how high a price for a good, service, or commodity can be charged.

Market Supply Curve

A graphical representation that shows the relationship between the price of a good and the total output of the good all suppliers are willing and able to produce, holding other factors constant.