Often economists measure the loss in consumer surplus by looking ...

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Often economists measure the loss in consumer surplus by looking at the changing area below the Marshallian demand curve. This approach will provide a more accurate measure of the compensating variation of such a price increase if:
 a. the good occupies a small portion of a person's budget.
 b. the good occupies a large portion of a person's budget.
 c. the good has many close substitutes.
 d. the good has few substitutes.

Question 2

In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates.
 a. similar, similar
  b. elastic, lower
  c. elastic, higher
  d. inelastic, lower
  e. inelastic, higher

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Answer to Question 1

a

Answer to Question 2

e