Question

decision point: understanding the demand curve
youre enjoying a cup of moondogs coffee and trying to make sense
of the data on this demand curve.
what does this demand curve suggest?
select an option from the choices below and click submit.
this demand curve shows that youd maximize profits if you charged $1.50 for a cup of
coffee.
this demand curve shows that youd maximize profits if you charged $4.50 for a cup of
coffee.
this demand curve shows that people only love coffee so much -- if the price gets too high,
they cut back and stop buying it.

Explanation:

To determine the correct answer, we analyze each option:

1. A demand curve alone doesn't show profit maximization (profit needs cost info too), so the first two options (about charging $1.50 or $4.50 for max profit) are incorrect.
2. The third option correctly describes the law of demand: as price rises, quantity demanded falls (people cut back on buying coffee if price is too high), which matches the downward - sloping demand curve shown.

Answer:

The option with the thumbs - down icon: This demand curve shows that people only love coffee so much -- if the price gets too high, they cut back and stop buying it.