ECONOMICS
CONSUMERS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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$0
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$0.50
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$1
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$1.50
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Detailed explanation-1: -Total consumer surplus = $1.50 + $0.50 = $2.00 (Note: Neither Josh nor Jordan receive any consumer surplus because the price is greater than their willingness topay).
Detailed explanation-2: -Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it. Consumer surplus measures the benefit buyers get from participating in a market. Consumer surplus can be computed by finding the area below the demand curve and above the price.
Detailed explanation-3: -Remember, the demand curve traces consumers’ willingness to pay for different quantities. The amount that individuals would have been willing to pay minus the amount that they actually paid, is called consumer surplus.
Detailed explanation-4: -Consumer surplus is the difference between the highest price a consumer is willing to pay and the actual price they do pay for the good, or the market price.