The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is called - Choice utility. - consumer surplus. - consumer demand.

Question

Leticia Yates

Business

15 July, 02:29

The difference between the maximum price a consumer is willing to pay for a product and the actual price the consumer pays is called - Choice utility. - consumer surplus. - consumer demand.

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Delilah · Answer 1

Answer: Consumer surplus

Explanation:

Consumer surplus is defined as the difference between the total amount that consumers are willing and able to pay for a good or service (indicated by the demand curve) and the total amount that they actually do pay (i. e. the market price). Producers often take advantage of consumer surplus when setting prices. f a business can identify groups of consumers within their market who are willing and able to pay different prices for the same products, then sellers use price discrimination - this is a way of turning consumer surplus into producer surplus, put simply to make higher revenues and profits.

Airlines and train companies are expert at this, extracting from consumers the price they are willing and able to pay for flying to different destinations are various times of the day, and exploiting variations in elasticity of demand for different types of passenger service.

You will always get a better deal / price with airlines such as EasyJet and Ryan Air if you are prepared to book in advance. The airlines are happy to sell tickets more cheaply because they get the benefit of cash-flow together with the guarantee of a seat being filled. The nearer the time to take-off, the higher the price.

If a businessman is desperate to fly from Newcastle to Paris in 24 hours time, his or her demand is said to be price inelastic and the corresponding price for the ticket will be much higher.