Four People Each Have a Different Willingness to Pay for One

question 185

Multiple Choice

Four people each have a different willingness to pay for one unit of a good: George will pay $15, Glen will pay $12, Tom will pay $10, and Peter will pay $8. If price decreases from $9 to $8 then the consumer surplus from this unit will increase by

• A) $3.
• B) $4.
• C) $2.
• D) $1.

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Definitions:

Finished Goods

Items that have finished the production stage and are available for purchase by buyers.

Work in Process

Inventory in the production process but not yet completed, representing part of a company's current assets.

Indirect Materials

Indirect materials are materials used in the production process that do not directly become part of the final product and are not easily traceable to specific products or units produced.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, such as maintenance, utilities, and depreciation on manufacturing equipment.