Question

Bob is willing to pay $65 for a new pair of shoes. bill is willing to pay $50 for the same shoes. the shoes have a price of $45. what is the total consumer surplus for bob and bill

Answer 1

The surplus to be determined in this problem is equal to the difference between the money willing to be paid and the value of the purchase. hence for Bob, surplus value is equal to 65- 45 or $20 while that of Bill is equal to 50-45 or $5. The total surplus for both boys is equal to $20 + $5 or $25.