Suppose the market price is $5. The buyer who buys the first unit of output has a willingness-to-pay equal to $10; the buyer who buys the second unit of output has a willingness-to-pay equal to $9; and the buyer who buys the third unit of output has a willingness-to-pay equal to $8. Total consumer surplus is

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Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. For the first unit, the surplus is $5 ($10 - $5), for the second unit, it's $4 ($9 - $5), and for the third unit, it's $3 ($8 - $5). Adding these together gives a total consumer surplus of $12.

Suppose the Market Price Is $5