Which best describes consumer surplus?

The correct option is B. The difference between the price a consumer pays for an item and the price he/she is willing to pay for it. Consumer surplus is the difference between the price a consumer pays for an item and the price he/she is willing to pay for the item.

What is consumer surplus explain with the help of diagram?

Consumer’s Surplus = Total Utility – (Total units purchased x marginal utility or price). In short, consumer’s surplus is the positive difference between the total utility from a commodity and the total payments made for it. The concept of consumer’s surplus can also be illustrated with the help of Fig.

What is consumer surplus and why is it important?

Consumer surplus reflects the amount of utility or gain customers receive when they buy products and services. Consumer surplus is important for small businesses to consider, because consumers that derive a large benefit from buying products are more likely to purchase them again in the future.

What is consumer surplus and how is it measured?

Consumer surplus, also known as buyer’s surplus, is the economic measure of a customer’s excess benefit. It is calculated by analyzing the difference between the consumer’s willingness to pay for a product and the actual price they pay, also known as the equilibrium price.

Who defined consumer surplus?

Alfred Marshall, British Economist defines consumer’s surplus as follows: “Excess of the price that a consumer would be willing to pay rather than go without a commodity over that which he actually pays.” Hence, Consumer’s Surplus = The price a consumer is ready to pay – The price he actually pays.

What are the benefits of consumer surplus?

Consumer surplus is one way to determine the total benefit that consumers receive from their goods and services. If a consumer is willing to pay more for an item than the current asking price–the market price–then they are theoretically receiving an additional benefit by purchasing the item at that price.

What is consumer surplus essay?

Concept of Consumer’s Surplus: The price which a consumer pays for a commodity is always less than what he is willing to pay for it, so that the satisfaction which he gets from its purchase is more than the price paid for it and thus he derives a surplus satisfaction which Marshall calls Consumer’s Surplus (CS).

What are examples of surplus?

A surplus is when you have more of something than you need or plan to use. For example, when you cook a meal, if you have food remaining after everyone has eaten, you have a surplus of food. You can choose to throw the food out, stockpile it, or try to find someone else, like a neighbor, who wants to eat the food.