Question

Consider the following statements: A. Consumer surplus equals area under demand curve above price line, B. Marshall's measure assume constant marginal utility of money, C. Hicksian compensatory variation is better welfare measure than Marshallian surplus, D. Consumer surplus is always zero for perfectly elastic demand, E. Price elasticity of demand is unitary when total revenue \(TR\) is maximum.

• A. A, B, C, D Only
• B. A, B, E, D Only
• C. A, B, C, E Only
• D. A, B, C, D, E

Hint:

Consumer surplus is area under demand curve above price, and total revenue is maximum when demand elasticity is unitary.

Answer 1

The Correct Option is D