If the Price of a Good Increases by One Thousandth

question 70

Multiple Choice

If the price of a good increases by one thousandth of 1% and the quantity demanded goes to zero, then at that price, the good is

• A)non-responsive.
• B)inelastic.
• C)perfectly inelastic.
• D)perfectly elastic.

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Definitions:

Marginal Utility

The supplementary utility or enjoyment obtained by consuming an additional unit of a good or service.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.

Deadweight Loss

Reductions in combined consumer and producer surplus caused by an underallocation or overallocation of resources to the production of a good or service. Also called efficiency loss.

Producer Surplus

is the difference between what producers are willing to accept for a good or service versus what they actually receive, due to market prices.