If a buyer's willingness to pay for a new Honda is Rs20,000 and she is able to actually buy it for Rs18,000 her consumer surplus is ?
Correct answer: C. Rs2,000
- A. Rs18,000
- B. Rs20,000
- C. Rs2,000
- D. Rs0.
Explanation
Consumer surplus equals willingness to pay minus the actual price paid: Rs20,000 − Rs18,000 = Rs2,000. It measures the buyer’s net benefit from the purchase, not the total price or valuation.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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