A used car was recently priced at $20,000.00. Seeing the car, Bobby thought, "It's nice, but if I have to pay more than $19,500 for this car, then I would rather do without it." After negotiations, Bobby purchased the car for $19,250.00. His consumer surplus was equal to
A) $19,500.00.
B) $1,750.00.
C) $250.00.
D) $0.00.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Bobby was willing to pay up to $19,500, but he paid $19,250, so his consumer surplus is $19,500 - $19,250 = $250.

A Used Car Was Recently Priced at $20,000