Which best describes consumer surplus ?
Correct answer: D. The difference the price a consumer pays for an item and the price he/she is willing to pay
- A. The price consumers are willing to pray for a unit
- B. The cost of providing a unit
- C. The profits made by a firm
- D. The difference the price a consumer pays for an item and the price he/she is willing to pay
Explanation
Consumer surplus is the difference between what a consumer is willing to pay and what the consumer actually pays. It measures the buyer’s gain from paying less than the maximum valuation.
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About Microeconomics
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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