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Social ScienceIf Sam is willing to pay $50 for one good X, $30 for a second, $20 for a third, $8 for a fourth, and the market price is $10, then Sam’s consumer surplus isa. $10. b. $40. c. $70. d. $100. PreviousNext
If Sam is willing to pay $50 for one good X, $30 for a second, $20 for a third, $8 for a fourth, and the market price is $10, then Sam’s consumer surplus is
a. $10.
b. $40.
c. $70.
d. $100.
PreviousNext
Expert Answer
To determine the consumer surplus of person S.
Consumer surplus is the difference between the amount that a consumer is willing to pay and the amount actually paid by the consumer.
Person S is willing to pay $50 for first good but the market price is $10, so the consumer surplus for the first good equals $50 - $10 = $40.
Person S is willing to pay $30 for the second good when the market price is $10, so the consumer surplus for the second good is $30 - $10 = $20.
Person S is willing to pay $20 for t...
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Consumer demand theory
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