📚 Learning Guide
Consumer Surplus and Marginal Analysis
medium

Consumer surplus : willingness to pay :: marginal analysis : ?

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose 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

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