Consumer Surplus and Willingness to Pay quiz #2 Flashcards
Consumer Surplus and Willingness to Pay quiz #2
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Refer to figure 4-2. What area represents producer surplus at a price of p2?
The area above the supply curve and below the price p2. Which of the following statements regarding customers for the business-to-business market is true?
Business customers often have higher bargaining power and focus on value and price. What is a result of the ad revenue companies collect from advertisers?
It can allow companies to offer lower prices or free services, increasing consumer surplus. Which of the following situations will benefit lenders of fixed interest rate loans?
When inflation is lower than expected, the real value of repayments is higher. The consumer price index measures which of the following?
The average change in prices paid by consumers for a basket of goods and services. Which of the following firms most likely has the lowest bargaining power as a buyer?
A small firm purchasing from a monopoly supplier. Which of these is a criterion used to select a target market segment?
Similarity of needs and willingness to pay within the segment. When are consumers using an electronic retailing channel?
When they purchase goods or services online. What would be a likely consumer response when inflation increases?
Consumers may reduce spending or seek lower-priced substitutes. Which of the following is a situation in which consumer behavior occurs?
A person deciding whether to buy a product based on its price and perceived value. What is the key premise of the market segmentation theory?
Different groups of consumers have different willingness to pay and preferences. The formula for the marginal utility per-dollar-spent of a product is which of the following?
Marginal utility divided by the price of the product. What do consumers who are economic buyers do?
They seek to maximize their consumer surplus by comparing benefits and costs. Which of the following represents an inferior good?
A product for which demand decreases as consumer income rises. Which is an intangible product or action that consumers purchase?
A service, such as a haircut. What is it called when demand fails to account for the buyer's full willingness to pay?
Consumer surplus. Which statement about utility is accurate?
Utility is the satisfaction or benefit derived from consuming a good or service. Which of the following is used by firms to influence consumers?
Advertising and pricing strategies. Which two are among the reasons that consumers typically shop and buy online?
Convenience and the ability to compare prices. Which phrase describes the substitution effect?
When the price of a good rises, consumers switch to a cheaper substitute. Which is an example of a demand-oriented approach to setting an approximate price?
Setting prices based on consumer willingness to pay. Which of the following illustrates the relationship between a good and its complement?
An increase in the price of coffee leads to a decrease in demand for cream. How can a business best increase traffic to its e-commerce site?
By offering competitive prices and promotions to increase consumer surplus. Which of these is an example of a single product with multiple market segments?
A smartphone marketed to both business users and teenagers. Advertising has what primary impact on a market for a specific product?
It can increase perceived value and willingness to pay. What determines if a buyer is satisfied or dissatisfied with a purchase?
Whether the perceived benefit exceeds the price paid. Which of the following features about a buyer indicates that the buyer has high bargaining power?
The ability to choose among many competing sellers. What is the main reason companies offer free or promotional items and services?
To increase consumer surplus and attract new customers. Which statement accurately reflects the relationship between revenue and price?
Revenue equals price multiplied by quantity sold. What two groups make up the consumer market?
Individuals and households. Which of the following pairs of goods most likely represents substitutes?
Butter and margarine. Which of the following scenarios best illustrates bundling?
A company sells a printer and ink cartridges together at a lower combined price. What are the two basic approaches to price setting?
Cost-oriented and demand-oriented pricing. What is the amount of consumer surplus after the government imposes the excise tax on the market?
It is the area below the demand curve and above the new, higher price after tax. Jessica traded her string cheese for Jamie’s apple the other day at lunch. Who was made better off?
Both Jessica and Jamie, if each valued what they received more than what they gave up. Which market segment places the most importance on price?
Price-sensitive or value-conscious consumers. Assume the market depicted in the graph is in equilibrium. What is total surplus?
Total surplus is the sum of consumer surplus and producer surplus at equilibrium. Which of the following will not tend to shift the consumption schedule upward?
A decrease in consumer income. Which of the following exemplifies the substitution effect?
Choosing tea instead of coffee when the price of coffee rises. Which product would be considered an unsought good or service by a typical college student?
Life insurance.
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