If the Price Elasticity of Demand for a Product Is

question 107

Multiple Choice

If the price elasticity of demand for a product is unity, a decrease in price will

• A)have no effect upon the amount purchased.
• B)increase the quantity demanded and increase total revenue.
• C)increase the quantity demanded but decrease total revenue.
• D)increase the quantity demanded, but total revenue will be unchanged.

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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, indicating the benefit to consumers.

Demand Curve

The Demand Curve is a graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at each price level.

Consumer Surplus

The difference between the maximum price a consumer is willing to pay for a product and the actual price they pay.

Total Consumer Surplus

The sum of the individual consumer surpluses of all the buyers of a good in a market.