Which classification best describes a good for which buyers are willing to pay more than the market price, resulting in a positive consumer surplus?

• A. Normal good
• B. Public good
• C. Inferior good
• D. Giffen good

Answer: (A)

Verified step by step guidance

1. Understand the concept of consumer surplus: it is the difference between what buyers are willing to pay for a good and the actual market price they pay. A positive consumer surplus means buyers value the good more than its price.
2. Recall the definitions of the types of goods: a Normal good is one where demand increases as income increases; an Inferior good is one where demand decreases as income increases; a Giffen good is a special type of inferior good with an upward-sloping demand curve due to strong income effects; a Public good is non-excludable and non-rivalrous.
3. Analyze which type of good typically leads to buyers being willing to pay more than the market price: since consumer surplus depends on willingness to pay exceeding price, this is generally true for Normal goods where consumers derive positive utility and demand is strong.
4. Recognize that Public goods, while having unique characteristics, do not inherently imply a positive consumer surplus in the same way, and Giffen goods have unusual demand behavior but do not necessarily imply positive consumer surplus above market price.
5. Conclude that the classification best describing a good with positive consumer surplus (buyers willing to pay more than market price) is a Normal good.