34. Consumer's surplus is the highest in the case of :

(A) durable goods
(B) luxuries
(C) comforts
(D) necessities

Ans. (D) Necessities

Consumer Surplus is defined as the difference between the price a customer willing to pay for a product and the price that he actually ends up paying. When a consumer gets to purchase a good at a lower price than the price he is willing to pay, he gets more benefits creating a consumer surplus. As an example, for a necessity like food consumer would be willing to pay a higher price as it is a necessity. But at normal market conditions consumer can obtain food at a relatively lower price than what he is willing to pay and it creates a consumer surplus. When the utility (satisfaction) of a good falls the consumer surplus reduces as the consumer will not be willing to pay higher price.