ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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True
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False
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Either A or B
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None of the above
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Detailed explanation-1: -Answers. Consumer surplus is defined as the difference between the total amount that consumers are willing and able to pay for a good or service (indicated by the demand curve) and the total amount that they actually do pay (i.e. the market price) it is also known as buyer ‘s surplus.
Detailed explanation-2: -The substitution effect is positive for consumers since it means that they can continue to afford a particular product even if prices increase or their incomes decline. However, the substitution effect isn’t always positive for consumers, but instead, can be negative since it can limit product choices.
Detailed explanation-3: -The correct answer to the given question is option B. The demand for CDs increases because the price of a complement falls. In the given scenario, since the price of a CD player falls, its demand will increase as customers now have to spend less to purchase a CD player.
Detailed explanation-4: -Answer and Explanation: The correct answer is E: it shows the relationship between product demand and product price.