Question

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.
A- Even though I was willing to pay up to $49 for a used textbook, I bought a used textbook for only $44.
B- Even though I was willing to pay up to $71 for a watch, I bought a watch for only $63.

Answer 1

Answer:

Consumer surplus

Explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price the consumer pays.

For A, the consumer surplus is $49 - $44 = $5

For B, the consumer surplus is $71 - $63= $8

Producer surplus is the difference between the least price a producer is willing to sell his product and the price he actually receives from the sale of the product.

I hope my answer helps you