How do you calculate consumer's surplus? What happens to consumer's surplus when the price of a commodity rises?


Consumer's surplus = Total utility (in money terms) ? Total expenditure

Amount of consumer's surplus will decrease when price rises because part of the consumer surplus will be taken away by the supplier in the form of a higher price.

Economics

You might also like to view...

The major advantage of a market economy is that

a. it maximizes the need for resource-flow data b. prices convey most of the information necessary to coordinate economic activity among firms c. data are aimed at central planners d. prices are essentially meaningless e. All of the answers are correct

Economics

The activities of speculators often reduce the risk borne by other stock market participants

a. True b. False Indicate whether the statement is true or false

Economics

The velocity of money is 4. If nominal GDP is $1,200 billion then the stock of money

A. is $300 billion. B. is $400 billion. C. is $500 billion. D. is $4,800 billion.

Economics

When a monopolist sells two units of output its total revenues are $100. When the monopolist sells three units of output, its price per unit is $35. The monopolist's marginal revenue from selling the third unit of output is:

A. $5. B. $33.33. C. $35. D. $105.

Economics