Asked by Gisella Perez on May 10, 2024
Verified
The Adonis Tanning Salon is running a special this month of $1 a session.Lothario Goodman goes there 15 times,instead of his customary 5.
A) His consumer surplus is larger.
B) His consumer surplus is smaller.
C) His consumer surplus is the same.
D) It cannot be determined if his consumer surplus is larger,smaller,or the same.
Consumer Surplus
The gap between what consumers are ready to pay for a product or service and the actual amount they spend.
- Gain insight into the concept of consumer surplus and the techniques used to ascertain its value in different contexts.
- Comprehend the impact of special pricing strategies, including sales and discounts, on consumer surplus.
Verified Answer
US
Unathi SigcauMay 13, 2024
Final Answer :
A
Explanation :
Lothario Goodman's consumer surplus will be larger because he is able to receive the same service (tanning sessions) at a lower price than he normally would. The special offer of $1 a session is greater than his usual cost, so each session provides more value to him. By going 15 times instead of 5, he is able to get more value out of the special offer and therefore his consumer surplus increases.
Learning Objectives
- Gain insight into the concept of consumer surplus and the techniques used to ascertain its value in different contexts.
- Comprehend the impact of special pricing strategies, including sales and discounts, on consumer surplus.