Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. How much total consumer surplus do Ken and Mark get when each purchases one cigar?
A)$1
B)$2
C)$5
D)$7

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. For Ken, his consumer surplus is $5 ($20 value minus $15 price). For Mark, his consumer surplus is $2 ($17 value minus $15 price). The total consumer surplus is the sum of their individual consumer surpluses, which is $7. Therefore, the best choice is D.

Scenario 12-1 Ken Places a $20 Value on a Cigar, and Mark