JAMB - Economics (2019 - No. 59)
Consider the diagram below which shows a demand curve (d).
Total expenditure on a commodity is represented by the area TUVW. Consumer's surplus is represented by___________
The area VWX
The area XTUV
\(\frac {XW} {XT}\)
\(\frac {TU} {UV}\)
Explanation
Consumer surplus is the difference between what a consumer budgeted to have a commodity and the actual amount he paid to have the commodity.
From the diagram, the consumer budgeted TUX while the market price is TUVW, therefore, consumer surplus is TUX - TUVW which is equal to VWX.
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