Sharon is bidding on a new camera on an internet auction.She values the camera at $700 and wins the auction with a bid of $650, therefore:
A)Sharon's willingness to pay is $700 and her consumer surplus is 0
B)Sharon's willingness to pay is $700 and her consumer surplus is $50
C)Sharon's willingness to pay is $650 and her consumer surplus is $50
D)Sharon's willingness to pay is $650 and her consumer surplus is $0

Question

Quizplus · Accepted Answer

Sharon's willingness to pay is the maximum amount she values the camera at, which is $700. She won the auction with a bid of $650, so her consumer surplus, the difference between what she was willing to pay and what she actually paid, is $50.

Sharon Is Bidding on a New Camera on an Internet