On a graph of supply and demand, which of the following is represented by the he
ID: 1190483 • Letter: O
Question
On a graph of supply and demand, which of the following is represented by the height of demand curve when it intersects the price axis?
the profit the seller receives from selling the first unit
the price that maximizes consumer surplus
the willingness to pay of the consumer with the highest willingness to pay for the product
the total consumer surplus generated by the market
the profit the seller receives from selling the first unit
the price that maximizes consumer surplus
the willingness to pay of the consumer with the highest willingness to pay for the product
the total consumer surplus generated by the market
Explanation / Answer
Answer: Consumer surplus is difference between the maximum price consumer wants to pay and actually what he pays, Hence when the demand curve intersect the price axis, it simply says that how much maximum price a consumer wants to pay for good or service.
Hence correct options is " The willingness to pay of the consumer with highest willingness to pay for the product.
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