The tables below show reservation values of buyers and sellers in a market. There are three buyers and two sellers. Each buyer's reservation values for the fourth unit and above are negative, and each seller can produce at most four units.

-Refer to the tables above.Suppose that the price is $31 per unit.What is the sum of the three buyers' surplus? What is the sum of the two sellers' surplus? What is the social surplus?
A) Sum of buyers' surplus = $92; Sum of sellers' surplus = $94; Social surplus = $186
B) Sum of buyers' surplus = $92; Sum of sellers' surplus = $95; Social surplus = $187
C) Sum of buyers' surplus = $86; Sum of sellers' surplus = $95; Social surplus = $181
D) Sum of buyers' surplus = $108; Sum of sellers' surplus = $78; Social surplus = $186

Question

The tables below show reservation values of buyers and sellers in a market. There are three buyers and two sellers. Each buyer's reservation values for the fourth unit and above are negative, and each seller can produce at most four units.
 
-Refer to the tables above.Suppose that the price is $31 per unit.What is the sum of the three buyers' surplus? What is the sum of the two sellers' surplus? What is the social surplus?
A) Sum of buyers' surplus = $92; Sum of sellers' surplus = $94; Social surplus = $186 
B) Sum of buyers' surplus = $92; Sum of sellers' surplus = $95; Social surplus = $187 
C) Sum of buyers' surplus = $86; Sum of sellers' surplus = $95; Social surplus = $181 
D) Sum of buyers' surplus = $108; Sum of sellers' surplus = $78; Social surplus = $186

Quizplus · Accepted Answer

Buyer 1: Surplus = 15
Buyer 2: Surplus = 31 - 30 = 1
Buyer 3: Surplus = 0
Total Buyers' Surplus = $16

Seller 1: Surplus = 30 - 22 = 8
Seller 2: Surplus = 31 - 28 = 3
Total Sellers' Surplus = $11

Social Surplus = $16 + $11 + (4 x $31) = $187. Thus, option B is the correct answer.

The Tables Below Show Reservation Values of Buyers and Sellers