Willingness to Pay_Consumer Surplus

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Suppose Larry, Moe, and Curly are bidding in an auction for a mint-condition video of Charlie Chaplin's first movie. Each has in mind a maximum amount that he will bid. This maximum is called

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willingness to pay

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Willingness to pay

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measures the value that a buyer places on a good.

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The maximum price that a buyer will pay for a good is called the

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willingness to pay

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On a graph, the area below a demand curve and above the price measures

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consumer surplus.

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When a buyer’s willingness to pay for a good is equal to the price of the good, the

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buyer is indifferent between buying the good and not buying it.

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Consumer surplus is

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the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it.

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Consumer surplus

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is measured using the demand curve for a product.

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In a market, the marginal buyer is the buyer who would be the first to leave the market if the price were any higher.

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who would be the first to leave the market if the price were any higher.

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For any given quantity, the price on a demand curve represents the marginal buyer's willingness to pay.

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True