ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Greater than the sum of consumer surplus plus producer surplus
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Equal to the consumer’s willingness to pay plus producer’s cost
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Equal to the total cost to sellers minus the total value to buyers
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Equal to producer surplus plus consumer surplus
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Detailed explanation-1: -The total surplus in a market is a measure of the total wellbeing of all participants in a market. It is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between willingness to pay for a good and the price that consumers actually pay for it.
Detailed explanation-2: -Recall consumer surplus is the difference between what consumers are willing to pay and what they actually pay, whereas producer surplus is the difference between what the producer is paid and the marginal costs of production.
Detailed explanation-3: -The consumer surplus is q∗∫0d(q)dq−p∗q∗. The producer surplus is p∗q∗−q∗∫0s(q)dq. The sum of the consumer surplus and producer surplus is the total gains from trade.