Multiple Choice
How do complements affect the consumer surplus of a primary product or service?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
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In the context of consumer surplus and willingness to pay, which two groups make up the consumer market?
A
Buyers and sellers
B
Government and households
C
Consumers willing to pay more than the market price and consumers willing to pay less than the market price
D
Producers and suppliers
Verified step by step guidance1
Understand the concept of consumer surplus: it is the difference between what consumers are willing to pay for a good and what they actually pay (the market price).
Identify the groups in the consumer market based on their willingness to pay relative to the market price.
Recognize that consumers willing to pay more than the market price gain consumer surplus because they pay less than their maximum willingness to pay.
Note that consumers willing to pay less than the market price do not purchase the good, as the price exceeds their willingness to pay.
Conclude that the consumer market consists of these two groups: those willing to pay more than the market price (active buyers) and those willing to pay less than the market price (non-buyers).
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