Consumer Surplus and Willingness to Pay quiz #9 Flashcards
Consumer Surplus and Willingness to Pay quiz #9
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When you buy in bulk, the price per individual item does what? Decreases. Consumers create demand for what? Goods and services. Higher prices for sports jerseys can result in what? Lower quantity demanded and potential decrease in consumer surplus. The cost of 50 pounds of beans is what? The price per pound multiplied by 50. Age, education level, income, and taste are all examples of how consumer groups: Can be segmented for marketing purposes. Using the same products and promotions to appeal to large groups of people is called what? Mass marketing. Charging for the believed worth of a product or service is called what? Value-based pricing. Charging for the believed worth of a product or service is called what? Value-based pricing. When consumers seek to maximize their total utility, they are engaging in which of the following? Rational decision making. Typically, as customers grow older, which total product offer becomes increasingly important? Service and support features. The pricing objective known as unit volume is based on what? Maximizing the number of units sold. All else held constant, which one of the following will decrease if a firm increases its net income? The firm's cost-to-income ratio. What is the best example of impulse buying in a supermarket? Grabbing a candy bar at the checkout counter. All else equal, what happens to consumer surplus if the price of a good increases? Consumer surplus decreases. In the immediate environment, what is the first factor that affects the consumer? The product's price and availability. Modern portfolio theory (MPT) is designed to achieve which one of these? Optimal risk-return balance through diversification. How do market demands relate to needs and wants? Market demand reflects the aggregate willingness to pay for goods that satisfy needs and wants. The purchase of a computer by a person for household use would be counted in what category of GDP? Personal consumption expenditures. A likely example of substitute goods for most people would be what? Butter and margarine. The utility from a specific product is what? The satisfaction or benefit a consumer receives from consuming it. An increase in income will have what effect on normal goods? Increase demand for normal goods. Consumer surplus is equal to the difference between what? Willingness to pay and the market price. The rationing function of prices refers to what? Allocating goods to those who value them most, as shown by willingness to pay. Prices of related goods, complements and substitutes, are: Determinants of demand. An investor wanting large returns will be interested in companies that have what? High growth potential and profitability. The demand for a luxury good whose purchase would exhaust a big portion of one's income is what? Elastic; demand is sensitive to price changes. Mia wants to buy a book. The economic perspective suggests that Mia will buy the book if the Benefit (willingness to pay) exceeds the price. The amount of revenue produced per unit of an output sold is the what revenue? Average revenue. Suppose disposable income increases by 2000. What is the likely effect on consumption? Consumption spending will increase, but by less than $2,000. Testing reveals how frequently a customer will buy a product and at what price, among other things. Why is this important? It helps firms estimate demand and set optimal prices. The market value of an item is: The price at which it is bought and sold in the market. One popular pricing objective is to do what? Maximize profit or market share. Last year the average price for an airline ticket was 450. What does this represent? The market price for airline tickets. A consumer holds money to meet spending needs. This would be an example of the what? Transaction demand for money. When consumers decide to purchase a particular product, they do what? Compare the product's value to its price. When people consider purchasing a good, they do what? Weigh the benefits against the cost. Identify markets in which you act as a buyer/demander. Examples include the grocery market, housing market, and entertainment market. The percentage of total market sales accruing to one specific firm is called the what share? Market share. The ratio of perceived benefits to price is a product's what? Value. Consumer expectations are a determinant of (one word). Demand.
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