Multiple Choice
Which pricing strategy involves setting the price of a product or service based on the maximum amount a consumer is willing to pay, thereby capturing the highest possible consumer surplus?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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The pricing objective known as unit volume is based on which of the following considerations?
A
Maximizing total profit regardless of quantity sold
B
Minimizing production costs per unit
C
Maximizing the number of units sold
D
Setting prices equal to consumer willingness to pay
Verified step by step guidance1
Understand that the 'unit volume' pricing objective focuses on the quantity of units sold rather than the profit per unit or total profit.
Recognize that maximizing total profit regardless of quantity sold is a different pricing objective, often called profit maximization.
Note that minimizing production costs per unit relates to cost efficiency, not directly to pricing strategy based on sales volume.
Identify that setting prices equal to consumer willingness to pay is a strategy aimed at capturing consumer surplus, not specifically maximizing unit sales.
Conclude that the unit volume pricing objective is based on maximizing the number of units sold, emphasizing sales quantity over other factors.
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