Author Question: What is consumer surplus? Why would policy makers be interested in consumer surplus? What will be ... (Read 83 times)

evelyn o bentley · **on:** Jun 29, 2018

What is consumer surplus? Why would policy makers be interested in consumer surplus?

What will be an ideal response?

Question 2

Any output combination inside a production possibilities frontier is associated with unused or underutilized resources.

Indicate whether the statement is true or false

zenzy · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Consumer surplus is the difference between what a consumer is willing to pay for a product and what she actually pays for the product. Since consumer surplus measures the benefit that consumers receive from a good as they themselves perceive it, it serves as a good measure of economic well-being. Thus, if policy makers care about consumer preferences, they could use this measure to make normative judgments about market outcomes.

Answer to Question 2

TRUE