One factor that indicates a developed economy's standard of living is its:

• A. average consumer surplus per capita
• B. level of government intervention in pricing
• C. number of firms operating in the economy
• D. total producer surplus in the market

Answer: (A)

Verified step by step guidance

1. Understand the concept of consumer surplus: it measures the difference between what consumers are willing to pay for a good or service and what they actually pay. It reflects the net benefit to consumers and is often used as an indicator of welfare or standard of living.
2. Recognize that average consumer surplus per capita divides the total consumer surplus by the population, giving a per-person measure of the benefits consumers receive from market transactions.
3. Compare this to other options: 'level of government intervention in pricing' relates to policy but does not directly measure welfare; 'number of firms operating' indicates market structure but not welfare; 'total producer surplus' measures producer benefits, not consumer welfare or standard of living.
4. Conclude that average consumer surplus per capita is a direct economic measure that reflects the standard of living by showing how much benefit consumers gain from market exchanges on average.
5. Therefore, when evaluating indicators of a developed economy's standard of living, focus on measures that capture consumer welfare per person, such as average consumer surplus per capita.