The value of a product to an average consumer is V; and the average price that the firm can charge a consumer for that product is P. Here, V - P can be termed as:C. The firm's profit per unit sold (π) is equal to P - C, while the consumer surplus per unit is equal to V - P.

Question

Quizplus · Accepted Answer

The difference V - P represents the consumer surplus per unit, which is the value the consumer gains from purchasing the product at price P when they value it at V.

The Value of a Product to an Average Consumer Is