If a Consumer Is Willing to Pay $20 for a Pizza

question 7

Multiple Choice

If a consumer is willing to pay $20 for a pizza, but the price of the pizza is $10, then the amount of consumer surplus resulting from the customer's purchase of that pizza would be

• A) $30.
• B) $20.
• C) $10.
• D) There would be no consumer surplus.

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Definitions:

Retained Earnings

The part of a company's earnings that is not distributed as dividends to its shareholders but is instead reinvested or saved.

Dividend Cut

A reduction in the dividend amount paid by a corporation to its shareholders, often due to financial difficulties or the need to conserve cash.

Bird in the Hand Theory

A theory that suggests investors prefer the certainty of dividend payments to the possibility of much higher future capital gains.

Dividend Distribution

The method by which a corporation's earnings are distributed among its shareholders in the form of dividends.