Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
actual payment
B
optimal quantity
C
total utility
D
market equilibrium
Understanding the Answer
Let's break down why this is correct
Answer
Consumer surplus is the difference between what a buyer is willing to pay for a good and what they actually pay. Similarly, marginal analysis involves comparing the additional benefits of an action against its additional costs. Just as consumer surplus measures the benefit to consumers from purchasing a good at a lower price, marginal analysis helps individuals or businesses decide whether to take an action based on whether the benefits exceed the costs. For example, if a person is willing to pay $50 for a concert ticket but buys it for $30, their consumer surplus is $20. In marginal analysis, if a company considers spending $1,000 on a marketing campaign that is expected to bring in $1,500 in sales, they would assess the $500 gain as a positive outcome, just like the surplus in the first example.
Detailed Explanation
Marginal analysis helps find the best amount of something to produce or consume. Other options are incorrect because Some might think actual payment is the same as marginal analysis; Total utility is about the overall satisfaction from all units consumed.
Key Concepts
Consumer Surplus
Marginal Analysis
Consumer Behavior
Topic
Consumer Surplus and Marginal Analysis
Difficulty
medium level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.