If the equilibrium price is $2 per unit and there's a surplus in the market, offering to pay $1 for an additional unit would likely be feasible, given the lower demand relative to the supply, potentially leading to lower prices for additional units of cotton.
How to explain
The willingness to pay $1 for an extra unit of cotton, based on the market report showing surplus supply and an equilibrium price of $2 per unit, is likely feasible.
A surplus indicates an excess supply relative to demand, often leading to decreased prices. Offering $1 for an additional unit aligns with market conditions, as sellers might consider lowering prices to clear surplus stock.
Hence, in such a surplus scenario, the lower offer of $1 for an extra unit could be reasonable, given the market dynamics and the potential willingness of sellers to accommodate lower prices to move surplus inventory.
The Complete Question
Based on the current market report indicating surplus cotton supply, the equilibrium price for cotton stands at $2 per unit. Considering this information, would you be willing to pay $1 for an extra unit of cotton?
a. True, if yes.
b. False, if no.