Figure 2.4.2
-Refer to Figure 2.4.2 above. Fill in the blanks. For any price higher than P*, the quantity demanded ________, while for any price lower than P*, the quantity demanded ________.
A) drops to zero; increases without limit
B) drops to zero; remains constant
C) increases without limit; does not exist
D) does not exist; is unpredictable

Question

Figure 2.4.2
-Refer to Figure 2.4.2 above. Fill in the blanks. For any price higher than P*, the quantity demanded ________, while for any price lower than P*, the quantity demanded ________.
A) drops to zero; increases without limit 
B) drops to zero; remains constant 
C) increases without limit; does not exist 
D) does not exist; is unpredictable

Quizplus · Accepted Answer

For any price higher than P*, the quantity demanded drops to zero because consumers are not willing to pay more than the equilibrium price for the good. For any price lower than P*, the quantity demanded increases without limit because the lower price attracts more consumers, assuming the graph represents a typical demand curve where quantity demanded increases as price decreases.

Figure 2.4.2 -Refer to Figure 2.4.2 Above. Fill in the Blanks. for Blanks