Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.

-Refer to Table 7-5.If the market price of an orange is $1.20,then consumer surplus amounts to
A) $0.70.
B) $1.10.
C) $1.40.
D) $5.00.

Question

Table 7-5
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
 
-Refer to Table 7-5.If the market price of an orange is $1.20,then consumer surplus amounts to
A) $0.70. 
B) $1.10. 
C) $1.40. 
D) $5.00.

Quizplus · Accepted Answer

Consumer surplus is calculated as the difference between what consumers are willing to pay and what they actually pay. Without the table, we assume the highest willingness to pay is $2.60, so $2.60 - $1.20 = $1.40.

Table 7-5 For Each of Three Potential Buyers of Oranges, the Table