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For each scenario, decide whether it creates a producer or a consumer surplus. Then, calculate the ensuing surplus.


Alice is willing to spend $30 on a pair of jeans, and has a coupon for $10 off which she found online. She selects and purchases a pair of jeans which cost $35 pre-discount.

Alice's____________ surplus:

Jeff finds some steaks for $16 for which he would have been willing to pay $20 . The butcher notices the meat is near the expiration date and gives him an extra 75 % off.

Jeff's________ surplus

Nicole has a hockey puck from the 2018 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500 . After bidding closes, the last bid stands at $501.

Nicole's____________ surplus

Respuesta :

Answer:

Alice's consumer surplus =  $5

Jeff's consumer surplus = $16

Nicole's producer surplus = $1

Explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price of a 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 producer is willing to accept

Producer surplus = price of the good - least price the producer is willing to accept

Alice's consumer surplus = $30 - ($35 - $10) = $5

Jeff's consumer surplus = $20 - [$16 - (0.75 x $16)] = $16

Nicole's producer surplus = $501 - $500 = $1

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