The Wii is a wildly popular home video game console released by Nintendo. The Wii system was first available in the U.S. in November, 2006 and has sold more than 30 million units as of August 2010. The Wii retails for $199. Suppose Ahmed is willing to pay $230, Lana is willing to pay $175, and Bodie is willing to pay $300 for a Wii. If these three are the only consumers in the market, what is the value of the market consumer surplus?
A) $132
B) $855
C) $630
D) $498

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Ahmed's surplus is $230 - $199 = $31, Lana's surplus is $0 (since she won't buy), and Bodie's surplus is $300 - $199 = $101. Total surplus is $31 + $101 = $132.

The Wii Is a Wildly Popular Home Video Game Console