Multiple Choice
Which of the following is NOT an example of a consumer good or service?
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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
In the context of consumer surplus and willingness to pay, what is the amount of money for which an item sells in the competitive marketplace called?
A
Market price
B
Consumer surplus
C
Producer surplus
D
Willingness to pay
Verified step by step guidance1
Understand the concept of willingness to pay, which is the maximum amount a consumer is ready to pay for a good or service.
Recognize that consumer surplus is the difference between the willingness to pay and the actual amount paid.
Identify that producer surplus is the difference between the market price and the minimum amount a producer is willing to accept.
Recall that the amount of money for which an item sells in a competitive marketplace is the actual transaction price agreed upon by buyers and sellers.
Conclude that this transaction price is called the market price.
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