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Consumer Surplus and Marginal Analysis
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If a consumer is willing to pay $50 for a product but buys it for $30, what is their consumer surplus?

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Choose the Best Answer

A

$20

B

$50

C

$30

D

$80

Understanding the Answer

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Answer

Consumer surplus is the difference between what a consumer is willing to pay for a product and what they actually pay. In this case, the consumer is willing to pay $50 but only pays $30. To find the consumer surplus, we subtract the actual price from the maximum price they are willing to pay, which is $50 - $30. This means the consumer surplus is $20. Essentially, the consumer feels they have saved $20 by purchasing the product for less than what they were ready to spend.

Detailed Explanation

Consumer surplus is the extra money a buyer saves. Other options are incorrect because This answer suggests the buyer saved the whole amount they were willing to pay; This option confuses the price paid with the surplus.

Key Concepts

Consumer Surplus
Marginal Analysis
Consumer Behavior
Topic

Consumer Surplus and Marginal Analysis

Difficulty

easy level question

Cognitive Level

understand

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