Question

Consumer has no consumer surplus on _______ of the commodity consumed.

• A. first unit
• B. second unit
• C. all units
• D. last unit

Answer 1

Answer: (D)

last unit

Consumer has no consumer surplus on last unit of the commodity consumed. This is because consumer surplus is based on the law of diminishing marginal utility. According to this law, the Marginal utility/satisfaction of the consumer goes on decreasing with every additional consumption of the commodity. Hence, it is because of this law that the consumers willingness to pay for additional unit goes on diminishing and there is no consumer surplus on the last unit.