According to the Theory of Demand

question 19

Multiple Choice

According to the theory of demand,

• A) a change in the consumer's income or wealth changes the entire demand relationship
• B) the consumer's willingness to pay is also called the demand price
• C) demand price measures the marginal benefit (MB) of consuming another unit of the good
• D) a change in product price changes quantity demanded
• E) all of the above

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Definitions:

Pareto Optimality

A situation where resources are distributed in such a way that improving the situation of any single person would lead to the detriment of at least one other person.

Voluntary Exchange

An economic transaction where parties trade goods or services by mutual agreement without coercion.

Maximizing Profits

The process or strategy of adjusting production or operation dimensions to achieve the greatest possible financial return.

Potentially Efficient

A situation where a system or process has the capability to achieve optimal productivity, but currently may not be doing so.