Willingness to Pay_Consumer Surplus

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

• a resistance price

• consumer surplus

• willingness to pay

• top bid

Willingness to pay 

• measures the value that a buyer places on a good.

• is the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept

• is the maximum amount a buyer is willing to pay minus the minimum amount a seller is willing to accept.

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

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

• cost

• willingness to pay

• equity

• efficience

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

• producer surplus.

• consumer surplus.

• deadweight loss.

• willingness to pay.

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

• buyer’s consumer surplus for that good is maximized.

• buyer will buy as much of the good as the buyer’s budget allows.

• price of the good exceeds the value that the buyer places on the good.

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

Consumer surplus is

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

• the amount a buyer is willing to pay for a good minus the cost of producing the good.

• the amount by which the quantity supplied of a good exceeds the quantity demanded of the good.

• a buyer's willingness to pay for a good plus the price of the good.

Consumer surplus 

• is closely related to the supply curve for a product.

• is represented by a rectangle on a supply-demand graph when the demand curve is a straight, downward-sloping line.

• is measured using the demand curve for a product.

• does not reflect economic well-being in most markets.

In a market, the marginal buyer is the buyer

• whose willingness to pay is higher than that of all other buyers and potential buyers.

• whose willingness to pay is lower than that of all other buyers and potential buyers.

• who is willing to buy exactly one unit of the good.

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

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

• True

• False