Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke.
-Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be
A)$3.00.
B)$4.50.
C)$15.50.
D)$21.00.

Question

Table 7-2
This table refers to five possible buyers' willingness to pay for a case of Vanilla Coke. 
-Refer to Table 7-2. If the market price is $5.50, the consumer surplus in the market will be
A)$3.00. 
B)$4.50. 
C)$15.50. 
D)$21.00.

Quizplus · Accepted Answer

To calculate consumer surplus, we need to find the area below the demand curve and above the market price. At a price of $5.50, the quantity demanded is 3 cases, which means that the first three buyers are willing to pay that price and the last two buyers are not. 
The consumer surplus for each buyer can be found by subtracting their individual willingness to pay from the market price: 
Buyer 1: $7.50 - $5.50 = $2.00
Buyer 2: $6.00 - $5.50 = $0.50
Buyer 3: $5.50 - $5.50 = $0.00
Buyer 4: $5.00 - $5.50 = -$0.50 (no surplus since they are not willing to pay the market price)
Buyer 5: $4.50 - $5.50 = -$1.00 (no surplus since they are not willing to pay the market price)

Adding the individual surpluses together, we get: 
$2.00 + $0.50 + $0.00 + $0.00 + $0.00 = $2.50

Therefore, the consumer surplus in the market at a price of $5.50 is $2.50, which is closest to answer choice B ($4.50).

Table 7-2 This Table Refers to Five Possible Buyers' Willingness to Pay