ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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At the market price, quantity supplied is greater than quantity demanded
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At the current market price, quantity demanded is greater than quantity supplied
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Some consumers are willing to pay more than the equilibrium price but pay a lower market price
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Some consumers are willing to pay less than the equilibrium price but pay a higher market price
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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: -Consumer surplus is the difference between the price a consumer pays for an item and the price he/she is willing to pay for the item.
Detailed explanation-3: -On a supply and demand diagram, consumer surplus is the area (usually a triangular area) above the equilibrium price of the good and below the demand curve. The point at which a price stabilizes–so that both consumers and producers receive maximum surplus in an economy–is known as the market equilibrium.
Detailed explanation-4: -Consumer surplus, also known as buyer’s surplus, is the economic measure of a customer’s excess benefit. It is calculated by analyzing the difference between the consumer’s willingness to pay for a product and the actual price they pay, also known as the equilibrium price.