Multiple Choice
Which term best describes the characteristics of a product that satisfy consumer wants and needs in microeconomics?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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By providing good customer service, firms ________ their products.
A
decrease the consumer surplus associated with
B
increase the perceived willingness to pay for
C
eliminate the need for pricing strategies for
D
reduce the market demand for
Verified step by step guidance1
Understand the concept of consumer surplus, which is the difference between what consumers are willing to pay for a good and what they actually pay.
Recognize that good customer service can enhance the value or attractiveness of a product in the eyes of consumers.
Analyze how increasing the perceived value of a product affects consumers' willingness to pay, potentially raising it.
Consider that when consumers perceive higher value, their willingness to pay increases, which can shift the demand curve to the right or increase the price they are willing to pay.
Conclude that providing good customer service increases the perceived willingness to pay for a product, rather than decreasing consumer surplus, eliminating pricing strategies, or reducing market demand.
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