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

A. buyer's consumer surplus for that good is maximized.

B. buyer will buy as much of the good as the buyer's budget allows.

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

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

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Darryn D'Souza
Darryn D'SouzaLv10
28 Aug 2020

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Related questions

True or False:

1. Consumer surplus is the buyer's willingness-to-pay minus the seller's opportunity cost of production.

2. If your willingness-to-pay for a hamburger is $3 and you paid $2, then your consumer surplus is $5.00

3. The opportunity cost of production for a seller includes the implicit cost of the seller's time.

4. The height of the supply curve at a selected quantity is the seller's opportunity cost of producing that marginal unit.

5. Total surplus (total well-being) is the seller's cost of production minus the buyer's willingness-to-pay.

6. The competitive market equilibrium outcome is efficient because it allocates the produced output to the buyers who place the highest value on the good

7. Producer surplus is the area above the supply curve and below the price.

8. The competitive market equilibrium outcome maximizes total surplus (total well-being)

9. Producing and consuming more of a good will always increase the total surplus(total well-being).

Willingness to pay:

  is the lowest price that a buyer is willing and able to pay for a unit of a good.
  is the highest price that a buyer is willing and able to pay for a unit of a good.
  is equal to the price of the highest-priced goods in a consumption bundle.
  is equal to the price of the lowest-priced goods in a consumption bundle.

Efficiency in a market is achieved when

a. social planner intervenes and sets the quantity of output after evaluating buyers willingness to pay and sellers' costs

b. the sum of producer surplus and consumer surplus is maximized

c. all firms are producing the good at the same low cost per unit.

d. no buyer is willing to pay more than the equilibrium price for any unit of the good.

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