The consumer surplus enjoyed by the winner of a first-price auction is equal to the difference between ________.
A) her value for the item being auctioned and the value of the lowest bid
B) her bid and the second-highest bid
C) her maximum willingness to pay for the good and her bid
D) her bid and the market price of the good

Question

Quizplus · Accepted Answer

In a first-price auction, the winner pays the amount they bid. Therefore, the consumer surplus for the winner is the difference between their maximum willingness to pay (their value for the item) and the amount they actually bid and paid.

The Consumer Surplus Enjoyed by the Winner of a First-Price