The Rate at Which a Consumer Is Willing to Purchase

question 11

Multiple Choice

The rate at which a consumer is willing to purchase one good instead of another is called

• A) the maximization rate.
• B) opportunity cost.
• C) the total rate of substitution.
• D) the marginal rate of substitution.
• E) the budget constraint.

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Definitions:

Reservation Price

The top price a consumer agrees to pay for a product or service.

Expected Revenue

The anticipated amount of money that will be generated from sales of goods or services in a given period, often based on historical data and market analysis.

Sealed-Bid

A bidding process where all bidders simultaneously submit their bids in sealed envelopes, and the bids are not revealed until all bids have been submitted.

Second-Price Auction

An auction format in which the highest bidder wins the item, but the price paid is the second-highest bid.