A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.
If the market price of grills increases from $300 to $325, given the scenario described:
A. Collin would drop out of the market.
B. Collin's surplus would decrease the most.
C. Collin is the only consumer who would be affected in terms of surplus.
D. Daniel’s surplus would decrease.
A. Collin would drop out of the market.
You might also like to view...
What effect does foreign exchange market intervention by the U.S. Federal Reserve to increase the value of the U.S. dollar have on the U.S. monetary base?
a. The U.S. monetary base decreases. b. The U.S. monetary base increases. c. It does not have an effect on the U.S. monetary base at all. d. The effect on the U.S. monetary base is ambiguous and depends on where counterparties deposit the funds.
Carefully define the following terms and explain their importance in the study of macroeconomics: a. Expenditure schedule b. Saving schedule c. Equilibrium GDP d. Leakages schedule e. Injections schedule
What will be an ideal response?
Among the most important demand side factors explaining homes prices would be the
A. average wage paid to carpenters. B. cost of lumber. C. number of homebuilders. D. income of potential homebuyers.
Marginal cost is the:
A. change in total cost that results from producing one more unit of output. B. change in average total cost that results from producing one more unit of output. C. rate of change in total fixed cost that results from producing one more unit of output. D. change in average variable cost that results from producing one more unit of output.