Assume that the value of a base model computer to an average consumer is $300, the average price that Dell can charge a consumer for that product is $275, and the average unit cost of producing that product for Dell is $150. For this scenario, which statement is true?
A) Dell can easily increase its price above $300.
B) The profit for Dell on each computer is $150.
C) The consumer surplus per computer is $25.
D) The higher the intensity of competitive pressure, the higher the price that Dell can charge relative to $300.
E) The lower the consumer surplus, the greater the value for the money the consumer gets.

Question

Quizplus · Accepted Answer

The consumer surplus per computer is the difference between the value to the consumer ($300) and the price paid ($275), which is $25.

Assume That the Value of a Base Model Computer to an Average