-The Above Figure Shows Dana's Marginal Benefit Curve for Ice

question 259

Multiple Choice

-The above figure shows Dana's marginal benefit curve for ice cream. If the market price is $2 per gallon, then Dana's consumer surplus from the 4th gallon of ice cream is

• A) $0.
• B) $2.
• C) $3.
• D) $10.

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Definitions:

Producer Surplus

The difference between the amount a producer is willing to accept for a good or service and the actual amount received, reflecting the benefit to producers from participating in the market.

Price Discrimination

A strategy where a firm sells the same product at different prices to different groups of consumers, often based on their willingness to pay.

Third-degree Price Discrimination

A pricing strategy where a seller charges different prices to different groups of consumers for the same product, based on attributes like age, location, or income.

Profit Maximizing Prices

Prices set by firms to maximize their profits, determined by the intersection of marginal cost and marginal revenue.