If We Know a Consumer's Tastes, If We Know How

question 69

True/False

If we know a consumer's tastes, if we know how much his income (or budget)is, and if we know the price of any one good, then we can predict how much of that good he will buy.

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Definitions:

Producer Surplus

The discrepancy between the price at which producers are prepared to sell a product and the actual price they obtain.

Consumer Surplus

A mismatch between the price consumers feel prepared to pay for a good or service, and the actual outlay.

Competitive Price

A price that is in line with or slightly below the market average, aiming to attract customers in a competitive environment.

Total Surplus

is the sum of consumer surplus and producer surplus, representing the overall economic benefit to society from trade or market activity.