ECONOMICS
DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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prices are too low relative to consumer demand.
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prices are too high relative to consumer demand.
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prices are too low relative to producer demand
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prices are too high relative to producer demand.
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Detailed explanation-1: -Key Takeaways. A consumer surplus happens when the price consumers pay for a product or service is less than the price they’re willing to pay. Consumer surplus is based on the economic theory of marginal utility, which is the additional satisfaction a consumer gains from one more unit of a good or service.
Detailed explanation-2: -Whenever there is a surplus, the price will drop until the surplus goes away. When the surplus is eliminated, the quantity supplied just equals the quantity demanded-that is, the amount that producers want to sell exactly equals the amount that consumers want to buy.
Detailed explanation-3: -Demand is the function that gives the number of units purchased as a function of the price. The difference between your willingness to pay and the amount you pay is known as consumer surplus. Consumer surplus is the value in dollars of a good minus the price paid.
Detailed explanation-4: -If demand increases, producer surplus increases. If demand decreases, producer surplus decreases. Shifts in the supply curve are directly related to producer surplus. If supply increases, producer surplus increases.
Detailed explanation-5: -demand curve, ceteris paribus, the consumer surplus will increase. If there is a leftward shift in the demand curve then consumer surplus will decrease.