Suppose Raymond and Victoria attend a charity benefit and participate in a silent auction. Each has in mind a maximum amount that he or she will bid for an oil painting by a locally famous artist. This maximum is called:

a. deadweight loss

b. willingness to pay

c. consumer surplus

d. producer surplus

b. willingness to pay

Explanation:

Willingness to pay is the highest amount a consumer is willing to pay for a product.

The highest amount Raymond and Victoria are willing to pay for the painting is their willingness to pay.

The difference between the willingness to pay and the price of a product is known as consumer surplus. The consumer surplus for Raymond and Victoria is the difference between their willingness to pay and the price of the painting.

Producer surplus is the difference between what a producer is willing to accept for his product and the price the product is sold for.

Deadweight loss is when the forces of demand and supply aren't in equilibrium.