The Wii Is a Wildly Popular Home Video Game Console

question 43

Multiple Choice

The Wii is a wildly popular home video game console released by Nintendo. The Wii system was first available in the U.S. in November, 2006 and has sold more than 30 million units as of August 2010. The Wii retails for $199. Suppose Ahmed is willing to pay $230, Lana is willing to pay $175, and Bodie is willing to pay $300 for a Wii. What is the value of Lana's consumer surplus?

• A) No consumer surplus is generated because Lana will not buy the Wii.
• B) $249
• C) $225
• D) $24

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Definitions:

Product Cost

The total expense incurred to produce and deliver a product or service, including materials, labor, and overhead costs.

Period Cost

Costs incurred that do not directly relate to the production of goods, such as sales and administrative expenses.

Salespersons' Commissions

This refers to the payment made to sales staff based on a percentage of the sales they generate, as a form of incentive and reward.

Product Cost

The total expenditure incurred to produce, acquire, and sell products, including direct materials, direct labor, and overhead.