With reference to the term Consumer surplus consider the following statements Consumer surplus expla...........

Economic Affairs Others

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With reference to the term Consumer surplus, consider the following statements.

Consumer surplus explains the situation of a buyers’ market where supply exceeds the demand.
Economies with a consumer surplus are developed economies.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

Both statements are wrong. The benefits enjoyed by consumers as a result of being able to purchase a product for a price that is less than the most that they would be willing to pay is what is termed as consumer surplus. It is one of basic concepts to measure consumer wellness or welfare in economics. Total social surplus is composed of consumer surplus and producer surplus. It is a measure of consumer satisfaction in terms of utility.