Multiple Choice
Refer to Figure 7-1. When the price is p_1, consumer surplus is:
35
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 consumers calculate the value of a product, they:
A
always pay the maximum price listed by sellers
B
compare their willingness to pay with the market price
C
choose products solely based on production costs
D
ignore their personal preferences and buy based on advertising
Verified step by step guidance1
Understand the concept of consumer behavior in microeconomics, which involves how consumers make decisions about purchasing goods and services.
Recognize that consumers have a 'willingness to pay,' which is the maximum amount they are ready to pay for a product based on the value they perceive from it.
Know that the market price is the actual price at which the product is sold, determined by supply and demand in the market.
Realize that consumers compare their willingness to pay with the market price to decide whether to buy the product: if their willingness to pay is higher than or equal to the market price, they will buy; otherwise, they will not.
Conclude that consumers do not always pay the maximum price listed, do not base decisions solely on production costs, and do not ignore personal preferences or rely only on advertising.
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