Multiple Choice
Which term refers to costs that make customers reluctant to switch to another product 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
When making purchasing decisions, a buyer primarily considers which two factors?
A
Willingness to pay and the market price
B
Consumer surplus and producer surplus
C
Marginal cost and total revenue
D
Elasticity of demand and supply
Verified step by step guidance1
Understand that when a buyer makes a purchasing decision, they compare the value they place on a good or service to the cost they must pay for it.
Identify the buyer's 'willingness to pay' as the maximum amount they are ready to spend for a good or service, reflecting the perceived benefit or utility.
Recognize the 'market price' as the actual cost the buyer must pay to acquire the good or service in the marketplace.
Realize that the buyer will decide to purchase the good if their willingness to pay is greater than or equal to the market price, ensuring they gain positive net benefit.
Conclude that the two primary factors a buyer considers are therefore their willingness to pay and the market price.
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