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Consumer surplus equals: a) marginal benefit minus price, summed over the quantity consumed
Consumer surplus equals:
a) marginal benefit minus price, summed over the quantity consumed.
b) producer surplus at market equilibrium.
c) the deadweight loss plus the producer surplus.
d) the deadweight loss if there is underproduction.
e) price minus marginal cost.
Expert Solution
The answer is A.
Consumer surplus equals (a) marginal benefit minus price, summed over the quantity consumed.
A graph can be identified as the area below the demand curve but above the price paid up to the quantity ordered. Marginal benefit refers to the additional value gained from consuming additional units of a good. Economic surplus refers to the total benefits received by both consumers and producers. The concept is based on marginal utility theory in which additional satisfaction is gained by consumers when they consume one more unit of a good.
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