Table 7-3 For Each of Three Potential Buyers of Oranges, the Table

question 224

Multiple Choice

Table 7-3
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.

-Refer to Table 7-3.If the market price of an orange increases from $0.60 to $1.05,total consumer surplus

• A)increases by $2.90.
• B)decreases by $2.25.
• C)decreases by $2.70.
• D)decreases by $3.85.

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Definitions:

Network Externalities

The value of a product to a consumer increases with the number of that product being sold or used in the market.

Product Variety

The range of different products or services offered by a company or available in a market.

Cost Economies

Refers to economies of scale where the average cost per unit of production decreases as the volume of production increases.

Horizontal Differentiation

Products differ in ways that make them better for some people and worse for others.