Multiple Choice
Which of the following is NOT considered a buying incentive in the context of consumer surplus and willingness to pay?
21
views
5. Consumer and Producer Surplus; Price Ceilings and Floors
Consumer Surplus and Willingness to Pay
Struggling with Microeconomics?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Suppose Tina is considering purchasing a product and her willingness to pay is \$50. If the market price is \$40, what is Tina's consumer surplus?
A
\$50
B
\$10
C
\$0
D
\$40
Verified step by step guidance1
Understand the concept of consumer surplus: it is the difference between the maximum amount a consumer is willing to pay for a good and the actual market price they pay.
Identify Tina's willingness to pay (WTP), which is given as \$50.
Identify the market price of the product, which is given as \$40.
Calculate the consumer surplus using the formula: \(\text{Consumer Surplus} = \text{Willingness to Pay} - \text{Market Price}\).
Substitute the values into the formula: \(\text{Consumer Surplus} = 50 - 40\) to find the amount of surplus Tina gains from the purchase.
14:41mWatch next
Master Consumer Surplus in a Small Setting with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Consumer Surplus and Willingness to Pay practice set
Problem sets built by lead tutorsExpert video explanations