If the Cost to Download a Song from the Internet

question 164

Multiple Choice

If the cost to download a song from the Internet falls from $0.99 to $0.50 along an upward-sloping supply curve,producer surplus in the market for MP3 players is likely to:

• A)increase.
• B)decrease.
• C)not change.
• D)We cannot determine what producer surplus will do without information about consumer surplus.

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Definitions:

Private Consumptions

Expenditure by households and non-profit institutions serving households on goods and services used for individual consumption.

Total Amount

The aggregate sum of all units or quantities in consideration.

Pareto Optimal

A state of allocation of resources from which it is impossible to reallocate without making at least one individual worse off.

Public Goods

Goods or services that are non-excludable and non-rivalrous, meaning they are available to all and not diminished by use.