GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Average utility
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Marginal utility
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Total utility
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Does not have any relation to anyone of these
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Detailed explanation-1: -The maximum price the consumer is willing to pay for a commodity to maximize satisfaction is equal to marginal utility. Beyond this point, when marginal utility becomes lesser than the price the consumer pays, then the consumer’s equilibrium point cannot be achieved.
Detailed explanation-2: -Willingness to pay is the maximum amount that a buyer will pay for a good. It measures how much the buyer values the good or service. pay for a good minus the amount the buyer actually pays for it. quantities that buyers would be willing and able to purchase at different prices.
Detailed explanation-3: -That a consumer gets extra satisfaction from a good than the price he pays for it is undeniable. Moreover, as J.R. Hicks has pointed out “the best way of looking at consumer’s surplus is to regard it as a means of expressing it in terms of money income gain which accrues to the consumer as a result of a fall in price.”