Suppose that a customer's willingness-to-pay for a product is $79, and the seller's willingness-to-sell is $64. If the negotiated price is $65

Question

Quizplus · Accepted Answer

Consumer surplus is calculated as the difference between willingness-to-pay and the actual price paid, which in this case is $14 ($79 - $65). Producer surplus is calculated as the difference between the actual price received and willingness-to-sell, which in this case is $1 ($65 - $64). Therefore, consumer surplus is greater than producer surplus.

Suppose That a Customer's Willingness-To-Pay for a Product Is $79