Exhibit 5.7

-Refer to Exhibit 5.7,which shows four demand curves.If D(2)is the demand curve after a price increase,which demand curve best illustrates how consumers will respond to the change in price over one year?
A)curve D(1)
B)curve D(2)
C)curve D(4)
D)curve D(3)
E)curve D(1) or curve D(4)

Question

Exhibit 5.7
 
-Refer to Exhibit 5.7,which shows four demand curves.If D(2)is the demand curve after a price increase,which demand curve best illustrates how consumers will respond to the change in price over one year?
A)curve D(1) 
B)curve D(2) 
C)curve D(4) 
D)curve D(3) 
E)curve D(1) or curve D(4)

Quizplus · Accepted Answer

Curve D(3) shows a more elastic demand, meaning that consumers are more responsive to changes in price. Therefore, it is likely that after a price increase, demand will decrease and follow a curve similar to D(3) over one year.

Exhibit 5.7 -Refer to Exhibit 5.7,which Shows Four Demand Curves.If D(2)is the Demand