Concha Y Toro,a Chilean Wine,has Reduced the Price of One

question 111

Multiple Choice

Concha y Toro,a Chilean wine,has reduced the price of one bottle from $10 to $8.It previously sold 420 bottles in the month prior to the price reduction,and it now sells 525 bottles per month.It is experiencing:

• A) consumer surplus
• B) inelastic demand
• C) elastic demand
• D) unitary elasticity
• E) producer shortage

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Definitions:

Equilibrium Price

The market price at which the supply of an item matches demand, resulting in stable prices and volumes traded.

Per-unit Tariff

A fixed fee imposed by a government on each unit of imported or exported goods.

Tariff Revenue

Income that a government receives from imposing duties on imported goods.

Foreign Producers

Companies or individuals that manufacture or provide services in one country for consumption in another country.