Household’s Consumption Possibilities

Microeconomics
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A household’s consumption possibilities are determined by the taste, preferences, income level and the prices of different services and goods. If the taste of a food item is good, they will surely want to consume more than their actual requirement (Temin, 2012). Similarly, if the price is reasonable, the household will buy more than their usual requirement. This is why manufacturers try to maintain a balance between quality and affordability. Some brands do charge more than others, but the quality of their services and products is also very good. So, which product or service is chosen depends on the household. In the United States, for example, rich people love buying somewhat costly items as they believe that the quality and taste are better than inexpensive products. Those who belong to the middle class or lower class families cannot afford such products or items, so they will either consume these things in an insufficient number or will choose the items that look reasonable to them.
Consumer surplus can be defined as the difference between the price that a consumer pays and the price that he or she is willing to pay (Guiso, 2017). In simple words, we can say that consumer surplus happens when a consumer unwillingly pays a higher price for a good than they are actually looking to pay. This difference between the two prices can either be low or high. On a supply and demand curve, it can be regarded as the area between the demand curve and the equilibrium price. In order to calculate consumer surplus in the market, we first need to calculate the area of a shaded grey trian...