Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Consumer surplus for the three individuals is
A) $15.
B) $20.
C) $35.
D) $80.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Katie's surplus is $20 ($100 - $80), Kendra's is $15 ($95 - $80), and Kristen's is $0 ($80 - $80). Total consumer surplus is $20 + $15 + $0 = $35.

Suppose Katie, Kendra, and Kristen Each Purchase a Particular Type