Question

If this year's Nobel Prize winner in physics gives a free lecture at your school and just eight people attend, you may conclude that (LO1) a) no one derived any utility from his lecture b) none of the people who attended would have come if there had been an admission fee c) the lecture must have been at an inconvenient time. d) at least some of the people who attended enjoyed a consumer surplus.

Short answer

The correct answer is (d) at least some of the people who attended enjoyed a consumer surplus. This is because they received a potentially valuable lecture for free, suggesting that their perceived benefit outweighs the price paid.

Step-by-step solution

Understand the Concept of Consumer Surplus

Consumer surplus is the difference between what a person is willing to pay for a good or service and the actual price they pay. It represents the benefit consumers get when they pay a lower price than what they would have been willing to pay. In this situation, the Nobel Prize winner is giving a free lecture at the school.

Analyze Each Option

a) It's not correct to say that "no one derived any utility from his lecture" because there were 8 people who attended, which suggests that at least some of them may have benefited from the lecture. b) While it's possible that some attendees would still come if there was an admission fee, we cannot be sure about this statement, as it doesn't relate to consumer surplus. c) The lecture being at an "inconvenient time" is not supported by the given information and does not relate to the consumer surplus as well. d) "At least some of the people who attended enjoyed a consumer surplus" could be correct since they attended a free lecture by a Nobel Prize winner, which means they received a lecture that could have a higher perceived value to them for free.

Choose the Most Appropriate Option

Based on the analysis, the most appropriate answer is (d) at least some of the people who attended enjoyed a consumer surplus. This is because consumer surplus is the benefit received when paying a lower price than what one is willing to pay, and in this case, it is a free lecture given by a reputable expert.