Which of the Following Best Explains the Source of Consumer

question 56

Multiple Choice

Which of the following best explains the source of consumer surplus for Good A?

• A)​Many consumers pay prices that are greater than the equilibrium price of Good A.
• B)​Many consumers would be willing to pay more than the market price for some units of Good A.
• C)​Many consumers think the market price of Good A is greater than its cost.
• D)​Many consumers of Good A place a value on it that is less than the market price.

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Definitions:

Fixed Costs

Costs that do not change with the amount of goods or services produced, such as rent, salaries, and insurance.

Break-Even Point

The point at which total costs and total revenue are equal, resulting in no net gain or loss.

Variable Cost

A cost that changes in proportion to the level of output or activity.

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.