Table 3-1 Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Question

Table 3-1  Refer to Table 3-1. If the table represents the willingness to pay of four buyers and the price of the product is $30, then their total consumer surplus is

Quizplus · Accepted Answer

To calculate consumer surplus, we need to find the difference between the price that the buyers are willing to pay and the actual market price. In this case, only two buyers are willing to pay more than $30, with buyer 1 willing to pay $50 and buyer 3 willing to pay $40. The total consumer surplus is therefore $20, calculated as follows: 
Buyer 1: $50 - $30 = $20
Buyer 2: $30 - $30 = $0
Buyer 3: $40 - $30 = $10
Buyer 4: $30 - $30 = $0
Total Consumer Surplus = $20.