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Chapter 3: Q.31 (page 78)

What is consumer surplus? How is it illustrated on a demand and supply diagram?

Short Answer

Expert verified

The difference between what people would have been willing to pay and what they actually paid.

Step by step solution

01

Definition

Microeconomics: Microeconomics is a branch of economics that studies demand and supply mechanisms at the individual level, as well as consumer behavior and other such factors. The stream is critical for understanding the economic status of businesses and consumers.

02

Explanation

The difference between what individuals would have been willing to pay and what they actually paid is known as consumer surplus. Consumer surplus is represented by the area labeled F, which is above the market price and below the demand curve. 1st Illustration.

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Most popular questions from this chapter

How can you locate the equilibrium point on a demand and supply graph?

Does a price ceiling attempt to make a price higher or lower?

What is the effect of a price ceiling on the quantity demanded of the product? What is the effect of a price ceiling on the quantity supplied? Why exactly does a price ceiling cause a shortage?

A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis, how do you think the tariff reduction will affect the equilibrium price and quantity of flat screen TVs?

Will supply curves have the same shape in all

markets? If not, how will they differ?
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