Figure 21-20 The Following Graph Illustrates a Representative Consumer's Preferences for Marshmallows

question 44

Multiple Choice

Figure 21-20
The following graph illustrates a representative consumer's preferences for marshmallows and chocolate chip cookies:
-Refer to Figure 21-20. Assume that the consumer depicted the figure has an income of $50. Based on the information available in the graph, which of the following price-quantity combinations would be on her demand curve for chocolate chips if the price of marshmallows is $2.50?

• A)P=$2.50, Q=6
• B)P=$2.50, Q=10
• C)P=$5.00, Q=3
• D)P=$5.00, Q=5

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Definitions:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service versus what they actually pay, measuring consumer benefit.

Single-Price Monopoly

A market structure where the monopolist offers its product to all consumers at the same price, without price discrimination.

Pay-per-view

A service that allows consumers to pay for and watch individual events or content, typically through a cable or satellite TV provider or online platform.

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed that the buyer is willing to pay.