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The price of good X is Rs.20 and a consumer's marginal utility from the 1st unit is worth Rs.30. The consumer surplus on the 1st unit is:
ARs. 20
BRs. 30
CRs. 10
DRs. 50
Answer & Solution
Correct answer: C. Rs. 10
1. Consumer surplus on a unit = willingness to pay minus price.
2. Here it is $30 - 20 = Rs.10$.
3. Rs.30 is the willingness to pay, Rs.20 is the price, and Rs.50 adds them, so all are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.8_
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