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In respect of which of the following category of goods is consumers surplus highest?

A. Giffen goods

B. Necessities

C. Luxuries

D. Prestige goods

Correct Answer : B.


Consumer Surplus is defined as the difference between the price a consumer is willing to pay for a product and the price that he has actually paid . the consumer surplus for the goods which are less elastic (i.e. necessities) is higher. As an example, for a necessity like food, the consumer would be willing to pay a higher price as it is a necessity so the consumer surplus would be higher in the case of necessities.}

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