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The satisfaction which a consumer derives in the consumption of a commodity is equal to Rs. 320. The price of that commodity is Rs. 180. What will be his consumer surplus?
- a)180
- b)200
- c)140
- d)500
Correct answer is option 'C'. Can you explain this answer?
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The satisfaction which a consumer derives in the consumption of a comm...
Consumer Surplus Calculation
Given:
Price of commodity (P) = Rs. 180
Total satisfaction derived (TS) = Rs. 320
To calculate the consumer surplus, we need to find the difference between the total satisfaction derived by the consumer and the price paid for the commodity.
Consumer Surplus (CS) = Total satisfaction derived (TS) - Price of commodity (P)
Substituting the given values, we get:
CS = 320 - 180
CS = Rs. 140
Therefore, the consumer surplus is Rs. 140.
Explanation
Consumer surplus is a measure of the difference between the total satisfaction derived by a consumer from consuming a commodity and the price paid for it. In this case, the total satisfaction derived by the consumer is Rs. 320, and the price paid for the commodity is Rs. 180. The consumer surplus is calculated as the difference between these two values, which is Rs. 140.
Consumer surplus is an important concept in economics as it helps in understanding the welfare of consumers in a market. A higher consumer surplus indicates that consumers are deriving more satisfaction from the goods or services they are consuming, and are willing to pay more for them. This, in turn, indicates that the market is functioning efficiently and is meeting the needs of consumers.
Given:
Price of commodity (P) = Rs. 180
Total satisfaction derived (TS) = Rs. 320
To calculate the consumer surplus, we need to find the difference between the total satisfaction derived by the consumer and the price paid for the commodity.
Consumer Surplus (CS) = Total satisfaction derived (TS) - Price of commodity (P)
Substituting the given values, we get:
CS = 320 - 180
CS = Rs. 140
Therefore, the consumer surplus is Rs. 140.
Explanation
Consumer surplus is a measure of the difference between the total satisfaction derived by a consumer from consuming a commodity and the price paid for it. In this case, the total satisfaction derived by the consumer is Rs. 320, and the price paid for the commodity is Rs. 180. The consumer surplus is calculated as the difference between these two values, which is Rs. 140.
Consumer surplus is an important concept in economics as it helps in understanding the welfare of consumers in a market. A higher consumer surplus indicates that consumers are deriving more satisfaction from the goods or services they are consuming, and are willing to pay more for them. This, in turn, indicates that the market is functioning efficiently and is meeting the needs of consumers.
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The satisfaction which a consumer derives in the consumption of a comm...
Because consumer surplus = satisfaction derived - satisfaction amt paid = 320 - 180 = 140
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The satisfaction which a consumer derives in the consumption of a commodity is equal to Rs. 320. The price of that commodity is Rs. 180. What will be his consumer surplus?a)180b)200c)140d)500Correct answer is option 'C'. Can you explain this answer?
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