Consumer surplus in a market would equal what if the market price was zero?

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Prepare for the TAMU ECON202 Exam 2. Study with comprehensive resources, including flashcards and multiple choice questions. Gain insights into economic concepts and exam strategies to excel!

Consumer surplus is defined as the difference between what consumers are willing to pay for a good or service and what they actually pay for it. It is represented graphically as the area above the price level and below the demand curve.

If the market price is set at zero, consumers are effectively able to purchase goods without any cost. In this situation, the entire area under the demand curve becomes consumer surplus. This is because all consumers who value the good at any positive price are now able to consume it for free, capturing the maximum possible surplus.

The correct response describes this concept accurately. When there is no price, consumers receive a surplus equal to the entire area under the demand curve since the value they place on the good is represented on the demand curve, while the price they are paying is zero. This area encompasses all possible consumer surplus that would exist in a market where consumers can acquire goods at no cost.