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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

$10

Understanding the Answer

Let's break down why this is correct

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 buys the product for $30. To find the consumer surplus, we subtract the actual price from the price the consumer is willing to pay: $50 minus $30 equals $20. This means the consumer surplus is $20, which represents the extra benefit or value the consumer gains from the purchase. For example, if someone really wanted a concert ticket and was ready to pay $100 but bought it for $70, their consumer surplus would be $30.

Detailed Explanation

Consumer surplus is the extra money a buyer saves. Other options are incorrect because This answer might seem right if you think the total price is important; This could confuse the amount spent 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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