Table 7-1
This table refers to five possible buyers' willingness to pay for good Z.

-Refer to Table 7-1. 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 7-1
This table refers to five possible buyers' willingness to pay for good Z.
 
-Refer to Table 7-1. 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 the consumer surplus, we need to find the difference between the willingness to pay and the market price for each buyer, and then add those differences together. For buyer A, the difference is $7.50 - $5.50 = $2. For buyer B, the difference is $6.50 - $5.50 = $1. For buyer C, the difference is $5.50 - $5.50 = $0. For buyer D, the difference is $4.50 - $5.50 = -$1. For buyer E, the difference is $3.50 - $5.50 = -$2. Only buyers A and B are willing to pay more than the market price, so their differences are added to calculate the total consumer surplus, which is $2 + $1 = $3. Therefore, the correct answer is B, $4.50.

Table 7-1 This Table Refers to Five Possible Buyers' Willingness to Pay