Question

Jason purchased a new printer for $150 although he was willing to pay $175. The minimum price acceptable to the seller, Jasmine, was $145. The results of this transaction are a consumer surplus of ________.

Answer 1

Answer:

The consumer surplus is $25 and producer surplus of $5

Explanation:

Consumer surplus is the difference between the price the customer is willing to pay and the market price of a product. In the attached diagram it is represented on the demand supply graph as the portion between equillibrum price and demand curve.

Consumer surplus= 175- 150= $25

The producer surplus is difference between market price of a product and the amount a seller is willing to sell. On the demand and supply graph it is the area between equillibrum and supply as seen in the diagram.

Producer surplus= 150- 145= $5