Naomi is willing to pay $120 dollars for a multi-cat condo. She ends up paying $90. Naomi's consumer surplus is $30.
Consumer surplus is also known as buyer's surplus. It is the economic measure of a customer's excess benefit. It is calculated by analyzing the difference between the consumer's willingness to pay for a product and the actual price they pay.
Consumer surplus is calculated by:
Consumer surplus = Maximum price buyer is willing to pay – Actual price.
So, Naomi is willing to pay $120 dollars for a multi-cat condo but she ends up paying $90.
Therefore, $120 - $90 = $30
Hence, Naomi's consumer surplus is $30.
To learn more about Consumer surplus here:
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