Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Amanda experiences
A) a consumer surplus of $10, and Tony experiences a producer surplus of $190.
B) a producer surplus of $200, and Tony experiences a consumer surplus of $10.
C) a consumer surplus of $670, and Tony experiences a producer surplus of $200.
D) a producer surplus of $10, and Tony experiences a consumer surplus of $190.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price Amanda was willing to pay and the actual price she paid. That is, $340 - $330 = $10. Producer surplus is the difference between the actual price Tony received and the minimum acceptable price to him. That is, $330 - $140 = $190. Therefore, Amanda experiences a consumer surplus of $10, and Tony experiences a producer surplus of $190. Option A is the only choice that correctly matches these two values.

Amanda Buys a Ruby for $330 for Which She Was