Question

You are trying to figure out the right price for a particular section of seats to an event. Your best guess of what customers are willing to pay for those seats is $100—but you’re unsure about this guess. You have three days to sell those tickets. Where would you set the price?

a. Set the price at $120

b.Set the price at $100

c. Set the price at $99

d. Set the price at $80

Why did you choose the price you did?

Answer 1

For solving this question we need to understand the meaning of consumer surplus

Consumer surplus in simple terms is the difference of what consumers having willingness to pay and what they actually pay

In the given question since the person is having only the guess, the maximum willingness to $100 butit is the only guess so it might be true

For existing of consumer surplus the price has to be below $100

Hence option A and B are neglected

Now it is a guess so $99 maybe a risky option so he will put the actual price of ticket at $80c

The correct answer here is option d