Multiple Choice
Consumers are typically most willing to pay more for goods and services that bring them greater:
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
The willingness and ability of a consumer to buy a normal product falls because of which of the following?
A
A decrease in the price of a complementary good
B
A decrease in the consumer's income
C
An increase in the consumer's preferences for the product
D
A decrease in the price of the product
Verified step by step guidance1
Understand the concept of a normal good: A normal good is one for which demand increases when consumer income rises, and decreases when consumer income falls.
Analyze how changes in income affect demand for a normal good: If the consumer's income decreases, their willingness and ability to buy the normal good will also decrease, leading to a fall in demand.
Consider the effect of a decrease in the price of a complementary good: This typically increases the demand for the normal good, since complementary goods are used together.
Evaluate the impact of an increase in consumer preferences: An increase in preferences for the product would increase demand, not decrease it.
Assess the effect of a decrease in the price of the product itself: A lower price usually increases the quantity demanded, so it would not cause a fall in willingness and ability to buy.
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