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Consumer Surplus and Willingness to Pay quiz #3

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  • Which of the following would be most likely to increase consumption spending?
    An increase in consumer confidence or disposable income.
  • Which of the following statements is true regarding the leverage of supply chain savings?
    Supply chain savings can allow firms to lower prices and increase consumer surplus.
  • If consumers cannot resell products, what is the impact on consumer surplus?
    Consumer surplus is unaffected; it is based on willingness to pay versus price paid.
  • Which of the following is an example of consumption saving?
    Buying a product on sale and saving the difference.
  • Which of the following is a demand-increasing factor in the health care market?
    An increase in consumer income or population.
  • How is the economic surplus generated by a decision calculated?
    By subtracting the total cost from the total benefit.
  • Which of these is an example of a price?
    $10 for a movie ticket.
  • Which of the following pairs of goods are probably complements?
    Peanut butter and jelly.
  • What happens when two goods are complements?
    An increase in the price of one decreases the demand for the other.
  • What is considered a good price judgment?
    When the perceived benefit exceeds the price paid, resulting in consumer surplus.
  • The customer’s view of price can be described by which of the following equations?
    Perceived value minus price paid.
  • Which of the following is true about Red Bull’s price in relation to its promotional efforts?
    Red Bull uses premium pricing to signal high value, supported by strong promotion.
  • Which of the following best defines consumer surplus?
    The difference between a consumer's willingness to pay and the actual price paid.
  • Which of the items is most likely to be a complement to coffee?
    Cream or sugar.
  • What percentage of individuals that adopt a product can be classified as lagging adopters?
    About 16% (laggards in the diffusion of innovation model).
  • The highest percentage of retail sales is through what channel?
    Brick-and-mortar (physical) stores.
  • Which of the following enables a seller to capture the entire consumer surplus in a market?
    Perfect price discrimination.
  • What is the most logical example of complementary products?
    Printers and ink cartridges.
  • Which of the following is not true concerning substitutes?
    Substitutes always have identical prices and features.
  • Which of the following factors would impact a buyer's reservation price for a given good or service?
    Income, preferences, and availability of substitutes.
  • Which statement best distinguishes between consumer needs and wants?
    Needs are essential for survival; wants are additional desires.
  • Which of these is the best description of the substitution effect?
    Consumers switch to a cheaper alternative when the price of a good rises.
  • Which of the following is true about the meaning of consumption?
    Consumption is the use of goods and services to satisfy wants and needs.
  • Which one of the following is not a determinant of consumption spending?
    The weather (unless it directly affects demand for specific goods).
  • What term refers to the likelihood that the target segment will buy the product?
    Purchase probability.
  • Which of the following exemplifies the substitution effect in regard to substitute resources?
    Using plastic instead of metal when the price of metal rises.
  • Which of the following will cause an increase in consumer surplus?
    A decrease in the market price of a good.
  • How does a consumer know whether a purchase may be a good deal?
    If the benefit received exceeds the price paid, resulting in consumer surplus.
  • For which product(s) would it be most beneficial to wait before buying?
    Products expected to decrease in price or go on sale.
  • What is the purpose of the Dow Jones Industrial Average?
    To measure the performance of major U.S. companies and indicate market trends.
  • Why do investors diversify their portfolios?
    To reduce risk by spreading investments across different assets.
  • Which of the following illustrates the most economically sound choice for Brad?
    Choosing the option with the highest net benefit (consumer surplus).
  • Industry statistics indicate that satisfied clients will usually refer how many new clients?
    On average, satisfied clients refer about three new clients.
  • Which activity would a consumer most likely perform?
    Purchasing a product for personal use.
  • Which person made the best payment decision for their preferences?
    The person who maximized their consumer surplus based on their preferences.
  • If spectators buy more team jerseys when the team has a winning record, what does this illustrate?
    An increase in demand due to a change in consumer preferences.
  • What should consumers consider when it comes to the price of this product?
    Whether the price is less than or equal to their willingness to pay.
  • What is consumer-to-consumer e-commerce?
    Online transactions where individuals sell goods or services directly to other individuals.
  • Why do you think credit card companies don’t mind if you just make the minimum monthly payments?
    Because they earn more interest over time, increasing their revenue.
  • Which is the best example of the commercialization of modern sports?
    Selling team merchandise and tickets at prices that maximize consumer surplus.