Consumer surplus captures some of the value of a product thereby reduc

QUESTION

Consumer surplus captures some of the value of a product thereby reducing the price a firm can charge for it.

Indicate whether the statement is true or false.

ANSWER

TRUE
The price a firm charges for a good or service is typically less than the value placed on that good or service by the customer. This is because the customer captures some of that value in the form of what economists call a consumer surplus.