Suppose that a customer's willingness-to-pay for a product is $5, and the seller's willingness-to-sell is $2. If the negotiated price is $4, producer surplus is greater than consumer surplus.

Question

Quizplus · Accepted Answer

Consumer surplus = WTP - Price = 5 - 4 = $1
Producer surplus = Price - WTS = 4 - 2 = $2
Therefore, producer surplus is greater than consumer surplus.

Suppose That a Customer's Willingness-To-Pay for a Product Is $5