If the Cost to Download a Song from the Internet

question 90

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 iPod 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:

Price Decrease

A reduction in the cost that buyers must pay for a good or service.

Normal Good

A type of good for which demand increases when income increases, and falls when income decreases.

Income Rises

An increase in the amount of money received by individuals or entities, typically through wages, investments, or business activities.

Demand

The total quantity of goods or services that consumers are willing and able to purchase at a given price level.