Answer Each of the Following Questions on Demand and Consumer

question 98

Essay

Answer each of the following questions on demand and consumer surplus.
a. What is consumer surplus, and how is it measured?
b. What is the relationship between the demand curve and the willingness to pay?
c. Other things equal, what happens to consumer surplus if the price of a good falls? Why? Illustrate using a demand curve.
d. In what way does the demand curve represent the benefit consumers receive from participating in a market? In addition to the demand curve, what else must be considered to determine consumer surplus?

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Definitions:

Federal Minimum Wage

The lowest legal hourly wage that employers can pay their workers, as mandated by federal law.

Opportunity Cost

When deciding, the toll of not considering the next most beneficial alternative.

Bracelets

Jewelry items worn around the wrist for decoration, often made of metal, beads, or other materials.

Opportunity Cost

Opportunity cost is the value of the next best alternative foregone as a result of making a decision, representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.