Consider the diagram below which shows a demand curve (d).

Total expenditure on a commodity is represented by the area TUVW. Consumer's surplus is represented by___________

  • A The area VWX
  • B The area XTUV
  • C \(\frac {XW} {XT}\)
  • D \(\frac {TU} {UV}\)
jamb 2019english-language

The correct answer is A. The area VWX

Consumer surplus is the difference between what a consumer budgeted to have a commodity and the actual amount he paid to have the commodity.

From the diagram, the consumer budgeted TUX while the market price is TUVW, therefore, consumer surplus is TUX - TUVW which is equal to VWX.

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