Asked by Azriel Gamez on Jul 08, 2024
Verified
Refer to Table 7-4. Which of the following statements is correct?
A) Neither Sasha's consumer surplus nor Eric's consumer surplus can exceed Bob's consumer surplus, for any price of an orange.
B) All three individuals will buy at least one orange only if the price of an orange is less than $0.25.
C) If the price of an orange is $0.60, then consumer surplus is $4.90.
D) Eric will always have the highest consumer surplus.
Consumer Surplus
The divergence in total potential expenditure consumers are ready to make on a good or service against actual expenses incurred.
- Become familiar with the notion of consumer surplus and learn the steps involved in its calculation.
- Learn about the consequences of complements and substitutes for consumer surplus.
Verified Answer
LS
Logan StolbergJul 14, 2024
Final Answer :
A
Explanation :
The table shows willingness to pay for apples, not oranges. Bob's willingness to pay for the first apple is the highest among all buyers for all apples, indicating his potential consumer surplus could be higher than Sasha's or Eric's at any given price, assuming the price refers to apples as listed in the table.
Learning Objectives
- Become familiar with the notion of consumer surplus and learn the steps involved in its calculation.
- Learn about the consequences of complements and substitutes for consumer surplus.