If the market for a good is in equilibrium at a price of 20, what is true about consumer surplus?

Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. When the market for a good is in equilibrium, the price is set where the quantity demanded equals the quantity supplied. In this case, if the price is 20, consumer surplus can be calculated based on the demand curve.

Assuming that consumers are willing to pay more than 20 for some units of the good, the consumer surplus would be the area between the demand curve and the price level of 20, up to the quantity consumed. This means that consumer surplus is not simply a fixed amount of 20 per unit, but rather it varies depending on the quantity consumed and the demand curve’s slope.

So, to clarify, it is incorrect to say that consumers enjoy a surplus equal to 20 per unit on all units consumed. Instead, consumer surplus decreases as one consumes more units, providing more surplus on earlier units while diminishing on later units of consumption. Overall, consumer surplus exists because they are paying less than their maximum willingness to pay.

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