What Consumer Surplus Is Received by Someone Whose Willingness to Pay

question 6

Multiple Choice

What consumer surplus is received by someone whose willingness to pay is $35 below the market price of a good?

• A) $35
• B) $0
• C) ($35 × P*)
• D) None of these are correct.

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Definitions:

Short Run

A period in which at least one input is fixed and cannot be changed by the firm.

Economies Of Scale

The advantages in cost that enterprises gain by scaling up their operations, usually seen as a decrease in the per-unit cost of output as production scales up.

Minimum Average Cost

The lowest point on the average cost curve, representing the most efficient scale of production for minimizing costs.

Competitive Firm

A firm operating in a market where it has no power to influence market prices and typically faces many competitors with similar products.