Multiple Choice
You pay more for insurance coverage if you drive a lot because:
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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The pleasure, satisfaction, or happiness obtained from consuming a good or service is known as:
A
utility
B
consumer surplus
C
willingness to pay
D
marginal cost
Verified step by step guidance1
Understand the key terms given in the problem: utility, consumer surplus, willingness to pay, and marginal cost.
Recall that 'utility' in microeconomics refers to the pleasure, satisfaction, or happiness a consumer derives from consuming a good or service.
Recognize that 'consumer surplus' is the difference between what a consumer is willing to pay and what they actually pay, not the satisfaction itself.
Note that 'willingness to pay' is the maximum amount a consumer is ready to pay for a good or service, which relates to value but not directly to satisfaction.
Understand that 'marginal cost' is the additional cost of producing one more unit of a good, which is unrelated to consumer satisfaction.
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