If an individual consumer is willing to pay $11 for one unit of a good but finds he can purchase it for $7,he has a consumer surplus of
A) $18.
B) $11.
C) $7.
D) $4.
E) $2.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a good and what they actually pay. In this case, the consumer is willing to pay $11 but only has to pay $7, so their consumer surplus is $11 - $7 = $4. The other answer options are not correct as they either overestimate or underestimate the consumer surplus in this scenario.

If an Individual Consumer Is Willing to Pay $11 for One