Jean Places a High Value on a Loaf of Bread

question 7

Multiple Choice

Jean places a high value on a loaf of bread with which to feed his family,but can only afford to pay $1.Val regularly pays $2 for a loaf of bread,but often the bread molds before Val can finish the loaf.Total economic surplus is maximized when

• A)Jean receives a loaf of bread.
• B)Val gives Jean leftover bread.
• C)Val purchases the bread.
• D)Val and Jean purchase equal quantities of bread.

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Definitions:

Profit-maximizing

A strategy or process employed by firms aiming to achieve the highest possible profit by adjusting factors such as output, price, and input use.

Demand

Refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.

Third-Degree Price Discrimination

A pricing strategy where different prices are charged to different groups of consumers for the same product or service, based on varying demand elasticities.

Demand Function

A mathematical formula that describes the relationship between the quantity demanded of a good and its price, holding other factors constant.