If a consumer places a value of $20 on a particular good and if the price of the good is $25,then the
A)consumer has consumer surplus of $5 if he buys the good.
B)consumer does not purchase the good.
C)price of the good will rise due to market forces.
D)market is out of equilibrium.

Question

Quizplus · Accepted Answer

If the consumer places a value of $20 on the good and the price is $25, the consumer will not purchase the good. This is because the price is higher than the value the consumer places on the good, resulting in a loss for the consumer. Therefore, the consumer will only purchase the good if the price is lower than or equal to the value placed on it, resulting in consumer surplus.

If a Consumer Places a Value of $20 on a Particular