A typical demand curve will tell Palo that the higher the price of the cashmere sweaters his company makes,

Question

BlackTom AI · Accepted Answer

The question asks about what a typical demand curve implies regarding consumer purchases as price changes.
Option 1: 'the lower the output of producers.' This confuses demand with supply. The demand curve shows how quantity demanded responds to price, not how much producers output. Output is determined by the supply side and market equilibrium, not directly by the demand curve alone.
Option 2: 'the greater the production costs.' Production costs are a matter of the supply side and technology, not a direct implication of the demand curve. The demand curve reflects consumer behavior at given prices, independent of the cost structure faced by producers.
Option 3: 'the lower the quantity consumers will buy.' This aligns with the standard downward-sloping demand curve: as price rises, the quantity demanded typically falls, holding other factors constant. This describes the core relationship depicted by the demand curve.
Option 4: 'the greater the income effect.' The income effect refers to how a price change affects real purchasing power and thereby quantity demanded, but the demand curve itself does not quantify the magnitude of the income effect; it simply shows the general inverse relationship between price and quantity demanded. Specific inference about the income effect would require additional analysis beyond the curve alone.
Option 5: 'the lower the cross-price elasticity.' Cross-price elasticity measures how the quantity demanded of one good responds to a price change in another good. While related concepts can influence demand, the existence or sign of cross-price elasticity is not a direct consequence stated by the basic demand curve for a single good.
Thus, among the options, the statement that best captures the standard reading of a typical demand curve is that higher prices lead to lower quantity demanded, i.e., option 3.}

A typical demand curve will tell Palo that the higher the price of the cashmere sweaters his company makes,

View Explanation

Log in for full answers

Similar Questions

Using the demand schedule below representing a linear demand curve, answer the following question. If the price increases by $20 then the quantity demanded will ____________. Price Quantity $300 15 $250 30 $200 45 $150 60

A demand curve is a graph that relates

The above figure shows a graph of the market for pizzas in a large town. No pizzas will be demanded unless price is less than (enter only a number):

According to the Law of Demand, the demand curve for a good will (choose all correct answers):

A decrease in demand shifts the demand curve to the left.

Prestige products or services do not follow the Blank ______ curve.

The graph that shows how many units of a product or service consumers will want during a specific period at different prices is known as the Blank ______ curve.

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler