At a garage sale,Ken purchases a used bicycle for $8 when he was willing to pay $25.If the bicycle costs $75 new,Ken's consumer surplus is

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. In this scenario, Ken was willing to pay $25 but only paid $8, resulting in a consumer surplus of $17. Option A is incorrect because the consumer surplus is not zero, as Ken paid less than what he was willing to pay. Option C, D, and E are all incorrect because the consumer surplus cannot be larger than the difference between what Ken was willing to pay and what the bicycle costs new ($25 - $75 = $50).

At a Garage Sale,Ken Purchases a Used Bicycle for $8