Question

You go to the grocery store to buy a gallon of milk, expecting to pay $4.50 for it. Once you get there, you discover it is on sale for $2.50. The extra $2 that you saved on the $4.50 you were willing to pay for it represents A.Consumer surplus B.productive Efficiency C.Allocative efficiency D.producer surplus. Please help!!!

Answer 1

The extra $2 that you saved on the $4.50 you were willing to pay for it represents consumer surplus. Consumer surplus is the difference between the total amount that a consumer is willing to pay for a good or service versus what they actually pay for the good or service. The $2 represents what the consumer was willing to pay for the milk.