In a demand-and-supply diagram, the market price represents the value of the:
A) first satisfied want.
B) last unsatisfied want.
C) good in its next-lowest use.
D) good in its next-highest use.

Question

Quizplus · Accepted Answer

The market price represents the value of the good in its next-highest use. This is because as the demand for a good increases, its price also increases until the point where the next-highest use of the good becomes more valuable than the current use. At this point, some consumers switch to alternative goods, and the price of the original good levels off at the value of its next-highest use. Therefore, the market price reflects the value of the good in its best alternative use.

In a Demand-And-Supply Diagram, the Market Price Represents the Value