In the standard adjoining diagram, the measure of consumer surplus is
Consumer surplus is a measure in economics that reflects the difference between what consumers are willing to pay for a good or service versus what they actually do pay. It is essentially the area above the price level and below the demand curve.
Consider the diagram provided:
- The demand curve is typically represented by the line extending from point P downward.
- The consumer surplus is the area between the demand curve and the horizontal line representing the price level.
- Here, point A on the vertical axis represents the price level. The area AB between the price A, the demand curve at P, and the quantity axis at B is the consumer surplus.
- Therefore, the consumer surplus is the area AB in the given diagram.
Hence, the correct answer is option AB.
Important Questions from Consumer behaviour
Which one of the following is not the assumption for consumer behaviour based on the Ordinal Utility Theory?
In a situation of decision under uncertainty, if a consumer faces equal expected income from two alternatives, then s/he will take decision on the basis of
Arrange the following concepts of consumer behaviour in chronological order
A. Law of diminishing marginal utility
B. Law of demand
C. Revealed Preference Analysis
D. Indifference Curve Analysis
Choose the correct answer from the options given below
Absolute income hypothesis explain
Match the terms with the statement given below:
Select the correct option:(a) Human behavior results from a continuous and multidirectional interaction between the person and the situation (i) Interactionalism (b) People are central to the organization and they must be developed to their potential (ii) Productivity Approach (c) Manager's efficiency depends on the optimum utilization of resources (iii) Contingency Approach (d) The belief that there is no one best option available for an organization (iv) HR Approach
