Exhibit 6.3

-Refer to Exhibit 6.3,which shows the demand curve for neckties.If neckties were available free of cost,then _____
A)total utility, consumer surplus, and consumer expenditure would be undefined.
B)total utility and consumer surplus would be valued at $20, but consumer expenditure would be undefined.
C)total utility, consumer surplus, and consumer expenditure would all be equal to zero.
D)total utility, consumer surplus, and consumer expenditure would all be at their maximum.
E)total utility and consumer surplus would be valued at $36; consumer expenditure would be zero.

Question

Exhibit 6.3
 
-Refer to Exhibit 6.3,which shows the demand curve for neckties.If neckties were available free of cost,then _____
A)total utility, consumer surplus, and consumer expenditure would be undefined. 
B)total utility and consumer surplus would be valued at $20, but consumer expenditure would be undefined. 
C)total utility, consumer surplus, and consumer expenditure would all be equal to zero. 
D)total utility, consumer surplus, and consumer expenditure would all be at their maximum. 
E)total utility and consumer surplus would be valued at $36; consumer expenditure would be zero.

Quizplus · Accepted Answer

If neckties were available free of cost, the total utility and consumer surplus would be maximized because consumers are getting the product without paying anything, thus maximizing their satisfaction and the surplus they receive from the transaction. Consumer expenditure would be zero because they are not spending any money to obtain the neckties.

Exhibit 6.3 -Refer to Exhibit 6.3,which Shows the Demand Curve for Neckties.If