If Ed is willing to pay a maximum of $200 for a tweed sport coat but buys one for $180, that $20 saved is
A)his reservation price
B)the store's producer surplus
C)his total expenditure
D)his marginal utility
E)his consumer surplus

Question

Quizplus · Accepted Answer

His consumer surplus is the difference between his willingness to pay ($200) and the actual price he paid ($180), so it is $20. Therefore, the answer is E.

If Ed Is Willing to Pay a Maximum of $200