Consumers are often bewildered by the different array of choices, plans and prices that are offered by cell phone service companies
Explain in terms of consumer surplus why this makes sense from both the company's perspective and that of the consumer.
Consumers all have different ability and willingness to pay. If companies knew what the willingness to pay was for any particular consumer it would simply charge them the highest price that they could get away with. The truth is that this willingness to pay is only known by the consumer. If only one plan and price were offered many consumers may elect to subscribe to cell phone service and many may not. By offering different plans and prices it allows consumers to be able to choose the plan that gives them the greatest amount of consumer surplus. This in turn allows the firm to serve more customers and to make more profit.
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The diamond-water paradox of value can be explained by
A) distinguishing between total utility and marginal utility. B) water's high level of utility relative to diamonds. C) water's low price relative to diamonds. D) the fact that utility cannot be measured.
Why do countries impose protection even if it lowers economic welfare? Explain fully
What will be an ideal response?
When there's asymmetric information, who tends to have the better information?
A) lender B) borrower C) intermediary D) equally likely to be the borrower or the lender
Given the scenario described, if the market price of hammers decreased from $15 to $13, which of the following can be said with certainty?
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. A. Bob’s Hardware would no longer participate in the market. B. Total producer surplus would decrease. C. Only Bob's Hardware will experience a drop in producer surplus. D. Bob’s Hardware would continue to participate in the market.