Question

With respect to welfare economics, the equilibrium price of a product is considered to be the best price because it maximizes total revenue to firms and total utility to buyers.

a) True
b) False

Answer 1

The statement is false because buyers are often willing to pay more than the equilibrium price in certain cases, such as high demand or limited supply.

Step-by-step explanation:

The statement “In the goods market, no buyer would be willing to pay more than the equilibrium price” is false. Buyers are often willing to pay more than the equilibrium price in certain cases. These cases include situations in which there is high demand or limited supply of the product. In these instances, buyers may be willing to pay a higher price in order to secure the product. For example, during times of scarcity or during a highly anticipated product launch, buyers may be willing to pay a premium to ensure they can purchase the product.