A rational, optimizing, self interested consumer would consume up to the point where
a. |
the consumer surplus from the last unit is positive |
|
b. |
the consumer surplus from the last unit is negative |
|
c. |
the consumer surplus from the last unit is zero |
|
d. |
none of the above |
Answer - the consumer surplus from last unit is zero
Reason - A rational, optimizing, self interested consumer would consumer up to the point where the consumer surplus from the last unit is zero.
Consumer surplus is the excess of what a consumer is willing to pay over and above the price he is actually paying.
A rational consumer will consume only until the willingness to pay for a good is equal to the actual price of the good, making the consumer surplus to be zero when he would like to consume the last unit.
No rational consumer would like to pay for a thing which has a value lessor than what the is paying.
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