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Suppose Fred Honestly Tells the Car Dealer That the Maximum

Question 75

Multiple Choice

Suppose Fred honestly tells the car dealer that the maximum amount he's willing to pay for a Ford Focus is $20,000. The dealer says, "You're in luck! We have one on the lot for$20,000." Which of the following statements is true?


A) The dealer's consumer surplus is $20,000.
B) Fred and the dealer share $20,000 of consumer surplus.
C) Fred's consumer surplus is $20,000.
D) Fred receives no consumer surplus.
E) The car is not worth $20,000.

Correct Answer:

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