This Table Refers to Five Possible Buyers' Willingness to Pay

question 12

Multiple Choice

This table refers to five possible buyers' willingness to pay for a take-away meal. ?
$\begin{array}{|l|l|}\hline \text { Buyer } & \begin{array}{l}\text { Willingness To } \\\text { Pay }\end{array} \\\hline \text { David } & € 8.50 \\\hline \text { Laura } & € 7.00 \\\hline \text { Megan } & € 5.50 \\\hline \text { Mallory } & € 4.00 \\\hline \text { Audrey } & € 3.50 \\\hline\end{array}$
?
Refer to the table above. If the market price is €3.80,
?

• A) David's consumer surplus is €4.70 and total consumer surplus for the five individuals is €9.50.
• B) Megan's consumer surplus is €1.70 and total consumer surplus for the five individuals is €9.60.
• C) David, Laura, and Megan will be the only buyers of a take-away meal.
• D) the demand curve for the take-away meal, taking the five individuals into account, is horizontal.

Differentiate between direct and indirect price discrimination.

Evaluate how firms maximize profits through price discrimination.

Calculate optimal pricing strategies for maximizing profits.

Explain the role of consumer surplus and producer surplus in pricing decisions.

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Definitions:

Iconic Memory

A type of visual sensory memory that holds a brief photographic image of a scene that has just been observed.

Recency Effect

The improvement in retention of information learned at the end of a task.

Memory

The cognitive process involving the encoding, storing, and retrieving of information.

Forgetting

The processes that prevent information from being retrieved from a memory store.