Suppose Jerry consumes three hamburgers at McDonald's one evening.He figured the last one was just worth the price he paid for it.If the hamburgers he buys have a price of $1, then
A)he earned no consumer surplus
B)he would have earned consumer surplus if he had eaten one more hamburger
C)he was irrational
D)he may have earned consumer surplus on the first two hamburgers
E)he earned $1 consumer surplus on the third hamburger alone

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. In this case, Jerry consumed three hamburgers and he felt that the third hamburger was just worth the price he paid for it. This suggests that he enjoyed the first two hamburgers more than the third one, as he would have been willing to pay more for them than he actually did. Therefore, it is possible that Jerry earned consumer surplus on the first two hamburgers, but not on the third one. So, option D may be correct. Options A, B, and E are incorrect based on the explanation given. Option C is not necessarily true based on the information provided.

Suppose Jerry Consumes Three Hamburgers at McDonald's One Evening