Asked by Lyric Bolden on Jul 14, 2024
Verified
As a consumer you believe yourself to act rationally,optimally and self-interestedly.You like ice cream and value a pint at $7.Usually you buy a pint each week at $4.This week however,the price jumped to $5 a pint.What would you do?
A) buy the ice cream since the price is still below your maximum willingness to pay
B) buy the ice cream since even at the new price it gives you a positive amount of consumer surplus
C) not buy the ice-cream since the price is now higher
D) both A&B
Maximum Willingness to Pay
The highest amount a consumer is willing to spend on a good or service, reflecting the perceived value.
Consumer Surplus
The difference between what consumers are willing to pay for a good or service and what they actually pay.
Rational
Related to decision-making, denotes behavior in accordance with logic or reason, where choices are made to maximize self-interest or outcome.
- Elucidate the concept of consumer surplus and its sensitivity to price fluctuations.
Verified Answer
Learning Objectives
- Elucidate the concept of consumer surplus and its sensitivity to price fluctuations.
Related questions
(Figure: Market Demand)Look at the Figure Market Demand ...
Along a Given Downward-Sloping Demand Curve,a Decrease in the Price ...
An Increase in the Consumer Surplus in the Market for ...
If the Demand Curve for Ice Cream Is Downward-Sloping and ...
We Can Measure Total Consumer Surplus for Good X as ...