What do we call the monetary difference between the amount a consumer is willing and able to pay for an additional unit of a good and what the consumer actually pays?
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Definition: Consumer surplus is defined as the difference between the consumers' willingness to pay for a commodity and the actual price paid by them, or the equilibrium price. Description: Total social surplus is composed of consumer surplus and producer surplus. It is a measure of consumer satisfaction in terms of utility. Graphically, it can be determined as the area below the demand curve (which represents the consumer's willingness to pay for a good at different prices) and above the price line. It reflects the benefit gained from the transaction based on the value the consumer places on the good. It is positive when what the consumer is willing to pay for the commodity is greater than the actual price. Consumer surplus is infinite when the demand curve is inelastic and zero in case of a perfectly elastic demand curve. Also See: Consumer Theory, Indifference Curve, Law of Diminishing Marginal Utility, Inter-Temporal Choice, Utility
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What is called the difference between the price willing to pay by consumer and actual paid by consumer?Consumer surplus is the difference between the highest price a consumer is willing to pay and the actual price they do pay for the good, or the market price.
What consumers are willing to pay is called?Willingness to pay, sometimes abbreviated as WTP, is the maximum price a customer is willing to pay for a product or service.
What is meant by consumer surplus?Consumers' surplus is a measure of consumer welfare and is defined as the excess of social valuation of product over the price actually paid. It is measured by the area of a triangle below a demand curve and above the observed price.
Is the difference between the maximum price consumers are willing to pay for a product and the minimum price producers are willing to accept?Answer and Explanation: Consumer surplus a. is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price.
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