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JAMB Economics 2010 Question 11

Question 11

Theory of Consumer Behaviour

Consumer surplus tends to be higher when demand is

  1. A.perfectly elastic
  2. B.elastic
  3. C.inelastic
  4. D.unitarily elastic.
Show the answer and explanation

Answer: C (inelastic)

Explanation

Consumer surplus is the gap between what buyers are willing to pay and what they pay. A steep (inelastic) demand curve leaves a large area above the price, so surplus is higher.