John's demand schedule for pizza is indicated below. If the current price of pizza is $1.10 per slice, what is John's consumer surplus if he buys five slices of pizza?

Question

Quizplus · Accepted Answer

To calculate consumer surplus, we need to find the difference between the maximum price John is willing to pay for a good (also called his reservation price) and the actual price he pays. From the table, we see that John's reservation price for the fifth slice of pizza is $1.20. Since he pays only $1.10 per slice, his consumer surplus for that slice is $1.20 - $1.10 = $0. For the previous slices, his reservation price is higher than the current price, so his consumer surplus is positive. However, we are only interested in the consumer surplus for the fifth slice, which is $0. Therefore, the best choice is B.

John's Demand Schedule for Pizza Is Indicated Below