Jim is willing to purchase a coffee mug for $20. The price of the mug is $15, but after the mug goes on sale, its new price is $12. What is Jim's consumer surplus based on the sale price?

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Jim is willing to pay $20, but with the sale price at $12, his consumer surplus is $20 - $12 = $8.

Jim Is Willing to Purchase a Coffee Mug for $20