Consumers are often bewildered by the different array of choices, ...

[SO00]

Consumers are often bewildered by the different array of choices, plans and prices that are offered by cell phone service companies.
 
  Explain in terms of consumer surplus why this makes sense from both the company's perspective and that of the consumer.

Question 2

If the United States is a net borrower from abroad,
 
  A) national saving is less than domestic investment.
  B) net foreign investment must be positive.
  C) net capital flows must be negative.
  D) the United States must be exporting more than it is importing.

[enass]

Answer to Question 1

Consumers all have different ability and willingness to pay. If companies knew what the willingness to pay was for any particular consumer it would simply charge them the highest price that they could get away with. The truth is that this willingness to pay is only known by the consumer. If only one plan and price were offered many consumers may elect to subscribe to cell phone service and many may not. By offering different plans and prices it allows consumers to be able to choose the plan that gives them the greatest amount of consumer surplus. This in turn allows the firm to serve more customers and to make more profit.

Answer to Question 2

A

[SO00]

Correct answers!

[enass]

Great! Please up vote