Multiple Choice
Which of the following statements best describes the relationship between consumer surplus and a consumer's willingness to pay?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
Multiple Choice
When it comes to fees, micro-investing apps are beneficial because:
A
They eliminate all transaction costs, making investing completely free.
B
They always guarantee higher returns than traditional investment platforms.
C
They often charge lower fees, increasing consumer surplus for small investors.
D
They require large minimum investments, reducing accessibility for most consumers.
Verified step by step guidance1
Step 1: Understand the concept of fees in micro-investing apps. Fees are the costs charged by investment platforms for managing or facilitating investments.
Step 2: Recognize that micro-investing apps are designed to make investing accessible to small investors by often charging lower fees compared to traditional platforms.
Step 3: Analyze the impact of lower fees on consumer surplus. Lower fees mean investors keep more of their returns, which increases consumer surplus, especially for small investors.
Step 4: Evaluate the incorrect options: eliminating all transaction costs is unrealistic, guaranteeing higher returns is not assured, and requiring large minimum investments contradicts the purpose of micro-investing apps.
Step 5: Conclude that the correct benefit of micro-investing apps regarding fees is that they often charge lower fees, which increases consumer surplus for small investors.
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