As a Result of Consumer Surplus,a Firm Typically Charges Less

question 84

Multiple Choice

As a result of consumer surplus,a firm typically charges less price for a good or service than the value placed on it by customers because:

• A) the value creation results in a corresponding reduction in costs of production.
• B) it is highly unlikely that the same good or service will be available to the customers from other firms.
• C) the firm is competing with other firms for the customer's business.
• D) the firm charges a price that reveals a consumer's assessment of the product's value.
• E) the firm creates value for the customer by producing a wide range of products

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Definitions:

Variable Costs

Variable costs fluctuate with the level of output, increasing as production rises and decreasing as production falls.

Lawn-mowing

The process of cutting the grass in a yard or garden to maintain its appearance and health, often using a manual or motorized lawnmower.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogenous product, perfect information, and no barriers to entry or exit.

Marginal Cost

A rise in the comprehensive cost when producing an additional unit of a product or service.