alleryWhich is cited as a limitation of the concept of consumer surplus?
AIt always equals the market price
BIt cannot be measured precisely
CIt applies only to luxury goods
DIt rises with every price increase
Answer & Solution
Correct answer: B. It cannot be measured precisely
1. A key limitation is that consumer surplus cannot be measured precisely, since marginal utilities of different units are hard to quantify.
2. The marginal utility of money also changes as purchases are made, weakening money measurement.
3. It does not equal price, is not limited to luxuries, and falls with a price rise, so those options are wrong.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit II "Theory of Consumer Behaviour", p.11_
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