Do all consumers in a competitive market receive the same level of consumer surplus? Explain with an example
What will be an ideal response?
The amount of consumer surplus that each consumer enjoys will depend on the market price and the consumer's willingness to pay, which is derived from his or her individual demand curve. Thus, in a market where all consumers pay the same price, the higher an individual consumer's willingness to pay, the greater his consumer surplus. Suppose you and your friend were both buying French fries, but you like them much more than your friend does. Your consumer surplus in this case will be higher than your friend's because your willingness to pay for them is higher.
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You are considering buying a share of stock in Company ABC. At the end of years 1, 2, and 3 the stock will pay you a dividend of $10 . In addition, at the end of the third year you expect to sell the share of stock for $200 . If the interest rate is 5%, how much is the share of ABC stock worth to you today?
a. $200 b. $210 c. $220 d. $230
A shift in supply is defined as a change in
A. The supply curve because of a change in a determinant of supply. B. Quantity supplied because of a change in price. C. Price. D. Equilibrium quantity.