What Is the Difference Between Approximate and Exact Consumer Surplus

question 71

Multiple Choice

What is the difference between approximate and exact consumer surplus?

• A) Approximate consumer surplus is calculated using an uncompensated demand curve, while exact consumer surplus is calculated using a compensated demand curve.
• B) Approximate consumer surplus is calculated using a compensated demand curve, while exact consumer surplus is calculated using an uncompensated demand curve.
• C) There is no difference between approximate and exact consumer surplus.
• D) Approximate consumer surplus can be measured, while exact consumer surplus cannot be measured.

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Definitions:

Test Statistic

A calculated value from sample data used to decide whether to reject the null hypothesis in the context of a hypothesis test.

Normal Distribution

It is a probability distribution that features a symmetric alignment around the mean, emphasizing that data around the mean occur more than data at a distance.

Degrees of Freedom

The count of separate values or amounts that are capable of changing in an analysis while still respecting all limitations.

T-test

A statistical method employed to ascertain whether there's a notable disparity between the averages of two sets.