-In the Above Figure, If the Budget Line Is Originally

question 262

Multiple Choice

-In the above figure, if the budget line is originally line DE and the price of coffee decreases, the consumer will

• A) drink less coffee and increase bagel consumption slightly.
• B) drink more coffee and increase bagel consumption slightly.
• C) drink more coffee and decrease bagel consumption slightly.
• D) leave consumption of both coffee and bagels unchanged.

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Definitions:

Quantity Demanded

The amount of a good or service that consumers are willing and able to purchase at a given price.

Price Ceiling

A legal limit on how high the price of a product can be charged in the market.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the actual amount they do pay.

Producer Surplus

The difference between the amount producers are willing to sell a good for and the actual amount they receive by selling it at the market price.