Suppose that Hannah spends $3 to buy five biscuits. The marginal utility of the fifth biscuit is valued at $0.60; total utility of the five biscuits is valued at $4.20 . Given this information, what do we know about consumer surplus?
a. It is impossible to determine consumer surplus without knowing the marginal utility of the first four biscuits.
b. It is impossible to determine consumer surplus without knowing the price per biscuit.
c. It is impossible to determine consumer surplus without knowing the price Hannah was willing to pay for the first five biscuits.
d. Consumer surplus is equal to $2.40.
e. Consumer surplus is equal to $1.20.
E
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