What is consumer surplus? Why would policy makers be interested in consumer surplus?

What will be an ideal response?

Consumer surplus is the difference between what a consumer is willing to pay for a product and what she actually pays for the product. Since consumer surplus measures the benefit that consumers receive from a good as they themselves perceive it, it serves as a good measure of economic well-being. Thus, if policy makers care about consumer preferences, they could use this measure to make normative judgments about market outcomes.

Economics

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The graph illustrates the supply of sweaters. A fall in the price of sweaters brings

A) a decrease in the quantity supplied of sweaters. B) a movement along the supply curve. C) a shift of the supply curve. D) Both answers A and B are correct. E) Both answers B and C are correct.

Economics

Refer to Figure 4-4. What is the value of the deadweight loss at a price of $18?

A) $100 B) $180 C) $660 D) $1,040

Economics