Multiple Choice
Which of the following best describes how advertising influences consumer choice in relation to consumer surplus and willingness to pay?
34
views
5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
Struggling with Microeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
When money is acting as a store of value, it allows an individual to:
A
exchange goods and services directly without money
B
measure the elasticity of demand
C
save purchasing power for future use
D
determine the opportunity cost of production
Verified step by step guidance1
Understand the concept of money serving as a 'store of value': this means money can be saved and retrieved in the future, retaining its value over time to make future purchases.
Recognize that when money acts as a store of value, it allows individuals to save their purchasing power instead of having to spend it immediately.
Contrast this with other functions of money, such as a medium of exchange (which facilitates direct exchange of goods and services) and a unit of account (which measures value and can relate to elasticity of demand).
Identify that 'exchanging goods and services directly without money' describes barter, not the store of value function of money.
Conclude that the correct understanding is that money as a store of value enables individuals to save purchasing power for future use.
14:41mWatch next
Master Consumer Surplus in a Small Setting with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Consumer Surplus and Willingness to Pay practice set
Problem sets built by lead tutorsExpert video explanations