Chad is willing to pay $5.00 to get his first cup of morning latté.He buys a cup from a vendor selling latté for $3.75 per cup.Chad's consumer surplus is
A)$8.75.
B)$5.00.
C)$3.75.
D)$1.25.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Chad is willing to pay $5.00 but pays $3.75, so his consumer surplus is $5.00 - $3.75 = $1.25.

Chad Is Willing to Pay $5