Question

Andrew paid $30 to buy a potato cannon, a cylinder that shoots potatoes hundreds of feet. He was willing to pay $45. When Andrew's friend Nick learns that Andrew bought a potato cannon, he asks Andrew if he will sell it for $60, and Andrew agrees, since he would have sold it for $45. Nick is thrilled, since he would have paid Andrew up to $80 for the cannon. Andrew is also delighted. Determine the consumer surplus from the original purchase and the additional surplus generated by the resale of the cannon.

Answer 1

Answer:

$15

$35

Explanation:

Calculation to Determine the consumer surplus from the original purchase and the additional surplus generated by the resale of the cannon

Consumer surplus from the original purchase=$45-$30

Consumer surplus from the original purchase=$15

Additional surplus generated by the resale of the cannon=$80-$45

Additional surplus generated by the resale of the cannon=$35

Therefore the consumer surplus from the original purchase is $15 and the additional surplus generated by the resale of the cannon is $35