Question

The high price discourages customers who value the good more than the cost AND there is an inefficiently low quantity of output that doesn't maximize total surplus.

a. true
b. false

Answer 1

The statement is false because in the goods market, there can be buyers who are willing to pay more than the equilibrium price.

Step-by-step explanation:

The statement is false because in the goods market, there are buyers who are willing to pay more than the equilibrium price. The demand curve shows the relationship between the price of a good and the quantity demanded. As the price of a good increases, the quantity demanded typically decreases, but there are still buyers who are willing to pay a higher price for the good if they value it more than the cost.

For example, in the market for luxury goods, there are customers who are willing to pay a premium price because they perceive a higher value in the product. These customers prioritize the quality or exclusivity of the good over the cost. Therefore, in the goods market, there can be buyers who are willing to pay more than the equilibrium price.