Suppose an Individual Demand Curve Is Given by P =

question 39

Multiple Choice

Suppose an individual demand curve is given by P = 100 - 5Q, where P is the price of cigarettes ($/pack) and Q is the quantity she consumes (packs/week) .Assuming her income per week is $1,000 and the current price of cigarettes is $5 per pack, by how much will her consumer surplus decline if the price of cigarettes increased to $10/pack?

• A)$92.5
• B)$810
• C)$950
• D)$25

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Definitions:

Extraordinarily Large

A term used to describe a magnitude or amount that significantly exceeds what is common or expected.

Crop

A plant or plant product that is grown and harvested extensively for profit or subsistence.

Cross Elasticity

A measure of how the quantity demanded of one good responds to a price change of another good.

Complementary Goods

Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).