Donna can make a chair for $100; she charges customers $150 to buy the chair, and customers perceive that the chair is worth $225. In this case, the consumer surplus is:
A) $50.
B) $75.
C) $125.
D) $150.
E) $225.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Here, consumers are willing to pay $225 but pay $150, so the consumer surplus is $225 - $150 = $75.

Donna Can Make a Chair for $100; She Charges Customers