Suppose a Consumer Is Willing to Pay a Maximum of $45

question 3

Multiple Choice

Suppose a consumer is willing to pay a maximum of $45 for a brand of perfume whose price increases from $37 to $41.What will be the impact of this price rise on the consumer surplus?

• A)Consumer surplus will increase by $8.
• B)Consumer surplus will decline by $8.
• C)Consumer surplus will increase by $4.
• D)Consumer surplus will decline by $4.

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Definitions:

Expenses

Costs incurred by a business in the process of earning revenue, which are not directly tied to the production of goods or services.

Accounting Standard-Setting Body

An organization that establishes benchmarks or rules for preparing and presenting financial statements and other related accounting practices.

Securities and Exchange Commission

The U.S. federal agency responsible for regulating the securities industry and ensuring public companies adhere to disclosure laws.

Proprietorship

A business that is owned and run by one individual, where there is no legal distinction between the owner and the business entity.