Question

Match the following with the related concepts.

• A. Budget
• B. Utility
• C. Consumer surplus
• D. Marginal benefit

Answer 1

(i) The willingness to pay is determined by the utility.

(ii)The ability to pay is backed by the budget of the consumer.

(iii) Marginal benefit is the additional benefit derived from consuming one more unit of the good.

(iv) Consumer surplus is the surplus of willingness to pay over the price of the product.