Asked by Haris Naeem on Apr 29, 2024
Verified
(Table: Willingness to Pay for Peanuts) Using the table Willingness to Pay for Peanuts,if the price of a bag of peanuts is $4,what is the value of George's consumer surplus?
A) $4
B) $3
C) $6
D) $10
Consumer Surplus
The discrepancy in the total charges consumers are prepared and economically able to bear for a good or service, and the charges they actually bear.
Willingness to Pay
The maximum amount an individual is prepared to spend for a good or service, reflecting the value they assign to it.
- Acquire knowledge about total surplus and its constituents, namely consumer surplus and producer surplus.
Verified Answer
MH
Maggie HartleyApr 30, 2024
Final Answer :
C
Explanation :
To calculate George's consumer surplus, we need to find the difference between the maximum amount he is willing to pay and the actual price he paid. From the table, we see that George is willing to pay up to $10 for a bag of peanuts. However, he only paid $4, so his consumer surplus is $10 - $4 = $6. Therefore, the best choice is C.
Learning Objectives
- Acquire knowledge about total surplus and its constituents, namely consumer surplus and producer surplus.
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