Question

As a consumer you believe yourself to act rationally, optimally and self-interestedly. You like ice cream and value a pint at $7. Usually you buy a pint each week at $4. This week however, the price jumped to $5 a pint. What would you do? a. ​buy the ice cream since the price is still below your maximum willingness to pay b. ​buy the ice cream since even at the new price it gives you a positive amount of consumer surplus c. ​not buy the ice-cream since the price is now higher d. ​both A&B

Answer 1

both A&B

Step-by-step explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price of the product.

A rational consumer would always purchase a good if the price of the good is below the consumer surplus.

When tue price was $4, the consumer surplus is $7-$4=$3

When the price is $5, the consumer surplus is $7-$5=$2

The consumer should still purchase the good since the consumer surplus is still postive.

I hope my answer helps you