Tina Makumbi imports sesame oil from Ethiopia and sells to a market that has a downward sloping demand curve.The demand curve indicates that some consumers are willing to pay $1.50 or more per pound for the first few pounds, but every consumer gets to buy at the market clearing price of $0.50 per pound.The difference between the most that consumers would pay and the actual amount they do pay is called

Question

Quizplus · Accepted Answer

The difference between what consumers are willing to pay (in this case, $1.50 per pound) and what they actually pay ($0.50 per pound) is called consumer surplus. This represents the additional value that consumers receive from purchasing the good at a lower price. Therefore, the correct answer is E) consumer surplus.

Tina Makumbi Imports Sesame Oil from Ethiopia and Sells to a Market