Which of the following statements is TRUE?
A) Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price.
B) 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.
C) Total consumer surplus is represented graphically by the area beneath the demand curve.
D) Total consumer surplus is represented graphically by the area above the demand curve.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and its market price. Option B is incorrect because the consumer surplus in this case would be $5, not $2. Option C and D are also incorrect because total consumer surplus is represented graphically by the area above the market price and below the demand curve.

Which of the Following Statements Is TRUE