Which of the following statements is TRUE?

A. Total consumer surplus is represented graphically by the area beneath the demand curve.

B. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.

C. Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2.

D. Total consumer surplus is represented graphically by the area above the demand curve.

Question

Business

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9 December, 06:07

Which of the following statements is TRUE?

A. Total consumer surplus is represented graphically by the area beneath the demand curve.

B. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.

C. Bill is willing to pay $10 for a pound of clay. If he buys a pound of clay at a market price per pound of $5, his consumer surplus is $2.

D. Total consumer surplus is represented graphically by the area above the demand curve.

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Answers (1)

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Glenn Cruz · Answer 1

B. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.

Explanation:

As we know that the consumer surplus shows a difference between the maximum price willing to pay for a good or for rendering the service and the market price

In mathematically,

The consumer surplus = Willing to pay - Market price

Therefore, the correct statement is option B as the rest of the statements are wrong.