Consumers Are Often Bewildered by the Different Array of Choices

question 18

Essay

Consumers are often bewildered by the different array of choices, plans and prices that are offered by cell phone service companies. Explain in terms of consumer surplus why this makes sense from both the company's perspective and that of the consumer.

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Definitions:

Credit

An entry on the right side of an accounting ledger representing an increase in liabilities or income, or a decrease in assets or expenses.

Contra Accounts

Accounts used to offset or reduce the balance of another account, usually appearing on the balance sheet.

Merchandiser

A business or person that purchases goods for resale at a profit.

Debit Balances

Accounts on the left side of the double-entry bookkeeping system that typically include assets and expenses, increased by debits.