Multiple Choice
Which of the following strategies is most directly related to increasing consumer surplus and willingness to pay, thereby potentially increasing traffic to an e-commerce site?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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Which of the following best determines whether a buyer is satisfied or dissatisfied with a purchase in terms of consumer surplus?
A
Whether the buyer's willingness to pay exceeds the price paid
B
Whether the market price is equal to the equilibrium price
C
Whether the seller's cost is less than the price received
D
Whether the quantity demanded equals the quantity supplied
Verified step by step guidance1
Understand the concept of consumer surplus: it is the difference between the maximum amount a buyer is willing to pay for a good and the actual price they pay.
Identify that consumer surplus measures the buyer's satisfaction because it quantifies the extra benefit or utility the buyer receives from paying less than their willingness to pay.
Recognize that if the buyer's willingness to pay exceeds the price paid, the buyer gains positive consumer surplus and is therefore satisfied with the purchase.
Note that if the price paid is equal to or greater than the buyer's willingness to pay, the consumer surplus is zero or negative, indicating dissatisfaction or no gain from the purchase.
Conclude that the key determinant of buyer satisfaction in terms of consumer surplus is whether the buyer's willingness to pay exceeds the price paid, not market equilibrium price, seller's cost, or quantity demanded/supplied.
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