Asked by Yenill Jacalan on May 26, 2024
Verified
Suppose you sell a kayak for $600, but you were willing to sell it for $450. The buyer was willing to pay $650. The total surplus is $200.
Total Surplus
The sum of consumer surplus and producer surplus, representing the total benefit to society from the production and consumption of goods and services.
- Compute the aggregate surplus and acknowledge how it is divided between consumers and producers.
Verified Answer
JX
Junqing XiangMay 31, 2024
Final Answer :
True
Explanation :
The total surplus is the sum of the consumer surplus and the producer surplus. The consumer surplus is the difference between what the buyer was willing to pay ($650) and what they actually paid ($600), which is $50. The producer surplus is the difference between what the seller actually received ($600) and what they were willing to accept ($450), which is $150. Adding these together, $50 (consumer surplus) + $150 (producer surplus) = $200 (total surplus).
Learning Objectives
- Compute the aggregate surplus and acknowledge how it is divided between consumers and producers.
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