Consumer surplus is: a.the sum of quantity demanded and quantity supplied. b.the difference between quantity demanded and quantity supplied. c.the difference between the income and expenditure of a consumer in the current time period. d.the difference between the most a consumer would be willing to pay for a quantity of a good and what a consumer actually has to pay. e.the ratio of the price of a good to the proportion of income spent on the good.

Consumer surplus is the area below demand curve and above price. Producer surplus is the area below price and above supply curve. We know , Consumer surplus is the area below Dand curve and above price. The demand curve shows the consumers willingness to pay. Consumer surplus is given as :- CS = WTP - Price Where , CS = Consumer surplus WTP is the willingness to pay. This means consumer surplus is the difference between the consumer's willingness to pay and market price. Hence , The correct option is (d). the difference between the most a consumer would be willing to pay for a quantity of a good and what a consumer actually has to pay. And hence, All the remaining options are incorrect.

Answered: Consumer surplus is: a. the sum of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consumer surplus is:

	a.	the sum of quantity demanded and quantity supplied.
	b.	the difference between quantity demanded and quantity supplied.
	c.	the difference between the income and expenditure of a consumer in the current time period.
	d.	the difference between the most a consumer would be willing to pay for a quantity of a good and what a consumer actually has to pay.
	e.	the ratio of the price of a good to the proportion of income spent on the good.

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