Table 7-3
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.

-Refer to Table 7-3.If the market price of an orange is $1.20,consumer surplus amounts to
A)$0.70.
B)$1.10.
C)$1.40.
D)$5.00.

Question

Table 7-3
For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Alex, Barb, and Carlos are the only three buyers of oranges, and only three oranges can be supplied per day.
 
-Refer to Table 7-3.If the market price of an orange is $1.20,consumer surplus amounts to
A)$0.70. 
B)$1.10. 
C)$1.40. 
D)$5.00.

Quizplus · Accepted Answer

To calculate consumer surplus, we need to find the difference between the maximum amount each consumer is willing to pay and the market price. For Alex, this is ($4.00 - $1.20) = $2.80, for Barb it is ($2.00 - $1.20) = $0.80, and for Carlos it is ($1.50 - $1.20) = $0.30. Total consumer surplus is the sum of these individual surpluses, which is $2.80 + $0.80 + $0.30 = $3.90. Therefore, the correct answer is C because it is the closest option to $3.90.

Table 7-3 For Each of Three Potential Buyers of Oranges, the Table