A demand curve enables a firm to examine prices in order to determine:

• A. the quantity of a good consumers are willing to buy at each price
• B. the total cost of producing each unit of output
• C. the level of government taxation on the good
• D. the supply of the good available in the market

Answer: (A)

Verified step by step guidance

1. Understand the definition of a demand curve: it shows the relationship between the price of a good and the quantity consumers are willing to purchase at each price level.
2. Recognize that the demand curve is downward sloping, indicating that as price decreases, the quantity demanded generally increases, and vice versa.
3. Identify that the demand curve does not provide information about production costs, government taxation, or supply quantities; these are related to other concepts like supply curves or cost functions.
4. Focus on the key purpose of the demand curve, which is to help firms determine how much of a good consumers will buy at different prices.
5. Conclude that the correct interpretation of the demand curve is that it enables a firm to examine prices in order to determine the quantity of a good consumers are willing to buy at each price.