Home › CA Foundation › Business Economics › Theory of Consumer Behaviour › A consumer's marginal utilities (in Rs) for succ…
A consumer's marginal utilities (in Rs) for successive units of X are 30, 28, 26, 24, 22 and 20, while the market price is Rs.20 per unit. The total consumer surplus is:
ARs. 150
BRs. 40
CRs. 20
DRs. 30
Answer & Solution
Correct answer: D. Rs. 30
1. Surplus per unit = MU minus price, giving 10, 8, 6, 4, 2 and 0.
2. Total surplus = $10 + 8 + 6 + 4 + 2 + 0 = 30$.
3. Rs.20 is the price, Rs.40 double-counts a unit, and Rs.150 sums all MUs, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.9_
Related questions
Which is stated as an advantage of indifference curve analysis over Marshall's marginal utAt the consumer's equilibrium point in indifference curve analysis, the marginal rate of sIn indifference curve analysis, a consumer attains equilibrium at the point where the budgA point lying inside (below) the budget line indicates that the consumer is:A consumer has Rs.100 to spend on ice cream priced at Rs.20 and chocolate priced at Rs.10.The slope of the budget line is determined by the:Two indifference curves can never intersect each other because intersection would imply thFor two goods that are perfect complements, such as a left shoe and a right shoe, the marg