Jeanette is willing to pay $100 for the first pair of shoes,$80 for the second pair,$50 for the third,and $30 for the fourth.If shoes cost $50 and assuming that she buys shoes when she's indifferent about buying a given pair,Jeanette will buy _____ pairs of shoes and her total consumer surplus equals _____.
A)four;$110
B)three;$230
C)three;$80
D)four;$80

Question

Quizplus · Accepted Answer

If Jeanette buys the first pair at $100, her remaining budget will be $150, which is enough for her to buy the second and third pairs as well since their combined cost is $80+$50=$130. However, if she buys the fourth pair as well, her total spending will exceed her budget, and if she only buys the first three, she will have some money left over that she could put towards other things, resulting in a higher consumer surplus. Therefore, the best choice for her is to buy three pairs of shoes (the first three pairs) for a total cost of $100+$80+$50=$230, which results in a consumer surplus of $50 (the remaining budget).

Jeanette Is Willing to Pay $100 for the First Pair