The market for strawberries is perfectly competitive.Joe and Haley each purchase 3 boxes of strawberries.Joe's demand is much more elastic than Haley's.Which statement is true?
A)Joe's consumer surplus exceeds Haley's.
B)Haley's consumer surplus equals Joe's.
C)Haley's consumer surplus exceeds Joe's.
D)Joe receives no consumer surplus.
E)Neither Joe nor Haley receive any consumer surplus.

Question

Quizplus · Accepted Answer

Since the market for strawberries is perfectly competitive, the price is the same for both Joe and Haley. Since Joe's demand is more elastic, he will be more price sensitive and able to buy the strawberries at a lower price than Haley. Therefore, Joe's consumer surplus will be lower than Haley's, making choice C the correct answer.

The Market for Strawberries Is Perfectly Competitive