Question

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither. Statement Consumer Surplus Producer Surplus Neither Even though I was willing to pay up to $69 for a used textbook and even though the seller was willing to go as low as $60 in order to sell it, we couldn't reach a deal because the government imposed a price floor of $74 on the sale of textbooks. I sold a watch for $60, even though I was willing to go as low as $55 in order to sell it. Even though I was willing to pay up to $114 for a used laptop, I bought a used laptop for only $107.

Answer 1

Answer:

neither

producer surplus

consumer surplus

Explanation:

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

Consumer surplus = willingness to pay – price of the good

Producer surplus is the difference between the price of a good and the least price the seller is willing to sell the product

Producer surplus = price – least price the seller is willing to accept

The first scenario is neither a producer or consumer surplus because a transaction did not take place

The second scenario is a producer surplus.

the producer surplus = 60 - 55 = 5

The third scenario is a consumer surplus

consumer surplus = $114 - $107 = $7