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 $3, consumer surplus is $5.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the willingness-to-pay and the actual price paid. In this case, if the negotiated price is $3, the consumer's surplus would be $2 ($5 - $3), not $5. Therefore, the statement is false.

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