Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Consumer demand will decrease because the price is higher than the marginal cost.
B
Consumer demand will remain unchanged as the unique device does not affect their preferences.
C
Consumer demand may decrease but could also remain stable if consumers perceive high value in the unique offering.
D
Consumer demand will increase as more consumers will want to try the exclusive product.
Understanding the Answer
Let's break down why this is correct
Answer
When Gary's Gym has a patent on a unique exercise device, it can charge a higher price than the cost of making that device. This means that the gym can limit how many people can afford to use its services, leading to fewer customers. Because the price is high, only those who really want to use the device or can pay that price will join, which may decrease overall demand. For example, if the gym charges $100 a month for access to the device, only a few people might be willing to pay that much, compared to if the price was lower. So, while Gary's Gym can earn more money from each customer, it might end up having fewer customers overall.
Detailed Explanation
Consumers might not buy as much if the price is high. Other options are incorrect because Some might think that higher prices always mean less demand; This answer assumes that the unique device doesn't matter to consumers.
Key Concepts
Monopoly pricing
Price elasticity of demand
Consumer preferences
Topic
Monopoly and Game Theory
Difficulty
easy level question
Cognitive Level
understand
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