Author Question: Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford ... (Read 23 times)

saliriagwu · **on:** Jul 1, 2018

Suppose Ferd truthfully tells the car dealer the maximum amount he's willing to pay for a Ford Mustang: 20,000 . The dealer says, You're in luck; we have one on the lot for 20,000. Which of the following statements is true?
a. Ferd will not buy the car.
b. The car is not worth 20,000.
c. Ferd gets 20,000 in consumer surplus.
d. Ferd gets no consumer surplus.
e. The dealer earns 20,000 in consumer surplus.

Question 2

Suppose I am willing to pay 300 for a pair of Rollerblades and I purchase them on sale for 200 . My consumer surplus is
a. 300
b. 3/2
c. 100
d. 200
e. 0