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The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases?
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The concept of consumer surplus arises due to the reason that a) MU in...
**The Concept of Consumer Surplus**
Consumer surplus is a concept that measures the economic benefit that consumers receive when they are able to purchase a product at a price that is lower than the maximum price they are willing to pay. It is the difference between what consumers are willing to pay for a product and what they actually pay.
**Factors Affecting Consumer Surplus**
Consumer surplus is influenced by two main factors: marginal utility (MU) and price. Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one more unit of a product. Price, on the other hand, is the monetary value that consumers have to pay in order to obtain the product.
**Option A: MU increases but price remains constant**
If the marginal utility increases while the price remains constant, the consumer's willingness to pay for the product would increase. This would result in an increase in consumer surplus, as consumers are able to obtain more satisfaction from consuming the product without having to pay a higher price.
**Option B: MU increases but price decreases**
If the marginal utility increases and the price decreases, the consumer's willingness to pay for the product would also increase. This would lead to a larger consumer surplus, as consumers are able to obtain more satisfaction from consuming the product at a lower price.
**Option C: MU declines but price remains constant**
If the marginal utility declines while the price remains constant, the consumer's willingness to pay for the product would decrease. This would result in a decrease in consumer surplus, as consumers are not able to obtain as much satisfaction from consuming the product without having to pay a higher price.
**Option D: MU declines but price increases**
If the marginal utility declines and the price increases, the consumer's willingness to pay for the product would also decrease. This would lead to a smaller consumer surplus, as consumers are not able to obtain as much satisfaction from consuming the product at a higher price.
**Conclusion**
In conclusion, the concept of consumer surplus arises when the marginal utility and price of a product interact in such a way that consumers are able to obtain more satisfaction from consuming the product at a lower price. This can occur when the marginal utility increases and/or the price decreases. On the other hand, if the marginal utility declines and/or the price increases, consumer surplus would decrease.
Consumer surplus is a concept that measures the economic benefit that consumers receive when they are able to purchase a product at a price that is lower than the maximum price they are willing to pay. It is the difference between what consumers are willing to pay for a product and what they actually pay.
**Factors Affecting Consumer Surplus**
Consumer surplus is influenced by two main factors: marginal utility (MU) and price. Marginal utility refers to the additional satisfaction or benefit that a consumer derives from consuming one more unit of a product. Price, on the other hand, is the monetary value that consumers have to pay in order to obtain the product.
**Option A: MU increases but price remains constant**
If the marginal utility increases while the price remains constant, the consumer's willingness to pay for the product would increase. This would result in an increase in consumer surplus, as consumers are able to obtain more satisfaction from consuming the product without having to pay a higher price.
**Option B: MU increases but price decreases**
If the marginal utility increases and the price decreases, the consumer's willingness to pay for the product would also increase. This would lead to a larger consumer surplus, as consumers are able to obtain more satisfaction from consuming the product at a lower price.
**Option C: MU declines but price remains constant**
If the marginal utility declines while the price remains constant, the consumer's willingness to pay for the product would decrease. This would result in a decrease in consumer surplus, as consumers are not able to obtain as much satisfaction from consuming the product without having to pay a higher price.
**Option D: MU declines but price increases**
If the marginal utility declines and the price increases, the consumer's willingness to pay for the product would also decrease. This would lead to a smaller consumer surplus, as consumers are not able to obtain as much satisfaction from consuming the product at a higher price.
**Conclusion**
In conclusion, the concept of consumer surplus arises when the marginal utility and price of a product interact in such a way that consumers are able to obtain more satisfaction from consuming the product at a lower price. This can occur when the marginal utility increases and/or the price decreases. On the other hand, if the marginal utility declines and/or the price increases, consumer surplus would decrease.
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The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases?
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The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases?.
The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The concept of consumer surplus arises due to the reason that a) MU increases but price remains constant b) MU increases but price decreases c) MU declines but price remains constant d) MU declines but price increases?.
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