Multiple Choice
In the context of consumer surplus and willingness to pay, if a consumer is highly satisfied with a product, how does this typically affect the number of new clients they are likely to refer?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
Multiple Choice
If spectators buy more team jerseys when the team has a winning record, which economic concept best explains this behavior?
A
An increase in willingness to pay due to higher perceived value
B
A decrease in consumer surplus because prices rise
C
A shift in the supply curve for jerseys
D
A reduction in demand for team jerseys
Verified step by step guidance1
Identify the behavior described: spectators buy more jerseys when the team has a winning record, indicating their demand changes based on the team's performance.
Recall that demand changes can be due to shifts in the demand curve, which occur when factors other than price affect consumers' willingness to buy a good.
Understand that a winning record increases the perceived value or utility of owning a jersey, which raises consumers' willingness to pay at every price level.
Recognize that this increased willingness to pay causes the demand curve to shift to the right, meaning more jerseys are demanded at the same price.
Conclude that the best economic concept explaining this behavior is an increase in willingness to pay due to higher perceived value, rather than changes in supply or consumer surplus.
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