If the Maximum Price a Person Is Willing and Able

question 90

Multiple Choice

If the maximum price a person is willing and able to pay for a good is $50,and consumers' surplus is $20,then it follows that the price the buyer paid for the good is

• A) $20
• B) $70
• C) $50
• D) $30
• E) There is not enough information to answer the question.

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Definitions:

Utility Maximization

The process by which consumers allocate their income in a way that maximizes their overall satisfaction.

Rules of Thumb

Simple, general principles or guidelines that are used to make decision-making quicker, albeit less precise, often based on practical experience rather than theory.

Decision Making

Decision making is the process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.

Biases

Systematic patterns of deviation from norm or rationality in judgment, where particular feelings or opinions influence decision-making.