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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

If the price paid for a certain item is $40 and the consumers’ surplus is $4, then what is the maximum buying price for that item? If the minimum selling price is $50 and the producers’ surplus is $4, then what is the price received by the seller?

To determine

Calculation of the maximum buying price and the price received by the seller.

Explanation

The formula for calculating the maximum buying price is given below:

Consumer surplus=Maximum willing to pay priceActually paying priceMaximum willing to pay price=Actually paying price+Consumer surplus=40+4=44

The maximum willing to pay or the maximum buying price is $44

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