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Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.

a. I sold a used textbook for $48, even though I was willing to go as low as $40 in order to sell it.
b. I paid $54 for a jersey sweater last week. This week, the same store is selling sweaters for $47.
c. Even though I was willing to pay up to $76 for a watch, I bought a watch for only $68.

Respuesta :

Answer:

A. Producer surplus

B. Neither

C. Consumer surplus

Explanation:

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

Producer surplus = price - least price the seller is willing to sell

$48 - $40 = $8

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

$76 - $68 = $8

The second scenario doesn't indicate the willingness to pay of the consumer or the willingness to sell it the producer. So it is not about either consumer or producer surplus.

I hope my answer helps you

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