The Difference Between the Maximum Price a Consumer Is Willing

question 29

Multiple Choice

The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is:

• A) allocative efficiency.
• B) productive efficiency.
• C) consumer surplus.
• D) producer surplus.

---

Definitions:

Discount Rate

The interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.

Plowback Ratio

The proportion of earnings retained by a company after dividends have been paid out, indicating the level of reinvestment in the business.

Required Return

The minimum expected return an investor demands for holding a particularly risky investment.

Market Capitalization Rate

An alternative term often used to refer to the cost of equity or the expected return of a market portfolio.