Gary Parker is willing to pay $700 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $600. It costs Apple $400 to produce this iPad. How much economic surplus does Apple receive if Gary purchases this iPad?

Question

Quizplus · Accepted Answer

Economic surplus is the difference between the maximum price a buyer is willing to pay and the minimum price a seller is willing to sell for. In this case, Gary is willing to pay $700 but Apple is selling for $600, so the economic surplus for Apple is $600 (selling price) - $400 (production cost) = $200. Therefore, the best choice is C.

Gary Parker Is Willing to Pay $700 for a New