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Unformatted text preview: equate Mu with price. Consumer equilibrium occurs at the fourth unit where Mu = Price = 2 which maximizes the consumers total satisfaction. For purchasing 4 units of the good he has to spend $8 (an objective evaluation) but he actually receives a total utility of 14 units (5 + 4 + 3 + 2) from the four units he purchases. Thus he receives 6 units of extra satisfaction (14 - 8 = 6): this is the consumers surplus ....
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- Fall '10