CA Foundation Exam > CA Foundation Questions > If total utility of a commodity is 5 and marg...
Start Learning for Free
If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?
- a)4
- b)3
- c)6
- d)2
Correct answer is option 'D'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
If total utility of a commodity is 5 and marginal utility is 1, a pers...
If you assume that the law of diminishing marginal utility operates and the Marginal utility at the last unit of consumption(i.e., 3rd unit) is 1, then for three units the total utility is 5(given)
Under the cardinal utility approach MU=P=1 ( assuming marginal utility of money is 1),then consumer surplus = TU - TC for the three units consumed.
Thus, CS=5–3=2.
Most Upvoted Answer
If total utility of a commodity is 5 and marginal utility is 1, a pers...
Total utility - person consumes × marginal utility =consumer surplus so (5-3×1=2).
Free Test
FREE
| Start Free Test |
Community Answer
If total utility of a commodity is 5 and marginal utility is 1, a pers...
Consumer surplus refers to the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. It represents the additional benefit that a consumer receives from a purchase, above and beyond what they paid for it.
In this case, the total utility of the commodity is given as 5, indicating the overall satisfaction or benefit that the consumer derives from consuming the commodity. The marginal utility, on the other hand, represents the additional utility or satisfaction derived from consuming an additional unit of the commodity.
Given that the marginal utility is 1, this means that consuming one more unit of the commodity provides an additional utility of 1. Therefore, the consumer consumes 3 units of the commodity, resulting in a total utility of 5.
To calculate the consumer surplus, we need to determine the difference between the maximum price the consumer is willing to pay and the actual price they pay. However, the question does not provide any information about the prices involved. Hence, we cannot calculate the consumer surplus with the given information.
Therefore, the answer cannot be determined based on the information provided.
In this case, the total utility of the commodity is given as 5, indicating the overall satisfaction or benefit that the consumer derives from consuming the commodity. The marginal utility, on the other hand, represents the additional utility or satisfaction derived from consuming an additional unit of the commodity.
Given that the marginal utility is 1, this means that consuming one more unit of the commodity provides an additional utility of 1. Therefore, the consumer consumes 3 units of the commodity, resulting in a total utility of 5.
To calculate the consumer surplus, we need to determine the difference between the maximum price the consumer is willing to pay and the actual price they pay. However, the question does not provide any information about the prices involved. Hence, we cannot calculate the consumer surplus with the given information.
Therefore, the answer cannot be determined based on the information provided.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer?
Question Description
If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? 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 If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer?.
If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? 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 If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer?.
Solutions for If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer?, a detailed solution for If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice If total utility of a commodity is 5 and marginal utility is 1, a person consumes 3 units. What is the consumer surplus?a)4b)3c)6d)2Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup