Question

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the Group of answer choices customer lifetime value. total return to shareholders. economic value created. consumer surplus.

Answer 1

Answer: economic value created

Step-by-step explanation:

From the question, we are informed that a firm incurs $400 to manufacture a television and that the customers are willing to pay a maximum of $600 for the television priced at $500.

In this scenario, the difference of $200 is the economic value created.

To get the economic value created, one has to subtract the cost a firm takes in producing a particular product from the amount that customers are willing to buy the product. In this case $200 is the economic value created.