Multiple Choice
Which of the following is a factor that determines how much a customer is willing to pay for a 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
Firms position products based on which of the following?
A
The number of competitors in the market
B
Government tax rates
C
Consumers' willingness to pay for the product
D
The marginal cost of production
Verified step by step guidance1
Understand the concept of product positioning: Firms position their products to appeal to specific consumer preferences and to differentiate themselves from competitors.
Recognize that product positioning is primarily influenced by consumers' willingness to pay, as firms aim to match product features and prices to what consumers value most.
Evaluate other options: The number of competitors affects market competition but does not directly determine product positioning; government tax rates influence costs but are not a basis for positioning; marginal cost of production affects pricing and supply decisions but not positioning strategy.
Conclude that the key factor for product positioning is consumers' willingness to pay, as it guides firms in designing and marketing products that meet consumer demand effectively.
Summarize that product positioning is about aligning the product's attributes and price with consumer preferences to maximize appeal and profitability.
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