Which of the following statements is true?

Question

1) The demand curve is an upward-sloping line which relates price and quantity demanded.

2) If a company that faces a downward-sloping demand curve charges the same price to all its customers, there are usually some customers who are paying less than their willingness to pay.

3) The quantity that corresponds to a particular price on the demand curve tells us the number of people who have that price as their willingness to pay.

4) All of the above.

Answer 1

1. FALSE The demand curve is downward sloping. At a very high price the quantity demanded is small. At lower prices more quantity is demanded.

 

2. TRUE. There are bound to be some customers who would purchase the product at a higher price but are happy to pay the price demanded by the supplier.

 

3. FALSE. The demand curve does not indicate the number of people willing to pay the price. It indicates the number of products that are demanded at various price levels.

 

4. FALSE