Question

"This pizza is okay," your friend says. "But i wouldn't pay even a little bit more for it. If they raised the price at all, I'd switch to Chinese food for lunch." Your friend can best be described as

A.the marginal buyer of pizza

B. receiving negative customer surplus

C. risk averse toward pizza

D. having very inelastic demand for pizza

Answer 1

He is not the marginal buyer for Pizza because not all this would spend the last Dollar to Pizza. If the price is increased by a bit, he would switch which means he has a very elastic demand. This is nothing related to risk level

Therefore (A,C,D) are wrong

Because even if the price increases by a bit he would switch, this means the price would be above the willingness to pay and if price is above the willingness to pay, then the consumer surplus is negative and therefore

(B) is the answer to this question