If the price of a soda is $0.50, and the marginal utility of the first soda consumed is valued at $2, then the consumer surplus of that first soda is
A) $0.50
B) $1.50
C) $2.00
D) $2.50
E) $4.00

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Here, the consumer is willing to pay $2 but pays $0.50, so the surplus is $2 - $0.50 = $1.50.

If the Price of a Soda Is $0