Question

Consumer surplus: measures the value between the price consumers are willing to pay for a product and the price they actually pay?

1) is minimized in market equiLiBrium.
2) measures the value between the actual selling price of a product and the price at which sellers are willing to sell the product.
3) measures the price at which sellers extract excess profits from consumers.

Answer 1

Consumer surplus measures the difference between what consumers are willing to pay and the market equilibrium price, maximizing at this equilibrium. It is different from producer surplus, which relates to the sellers, and is not minimized at market equilibrium.

Step-by-step explanation:

Consumer surplus measures the gap between the price that consumers are willing to pay for a good or service, based on their preferences, and the price they actually pay, which is usually the market equilibrium price. This concept is a critical part of economic efficiency, as it helps to quantify the benefit that consumers receive from participating in the market.

Contrary to the options presented in the question, consumer surplus is neither minimized at market equilibrium nor does it measure the gap between the actual selling price and the price sellers are willing to sell for; that is producer surplus. Consumer surplus is maximized at the market equilibrium quantity and price, and any deviation from this equilibrium can lead to a deadweight loss, which is a loss in total surplus.