The price of a cowboy hat is $100.Willie is willing to pay $130,Waylon is willing to pay $100,and Merle is willing to pay $85.All of the following statements are true EXCEPT:
A) Merle's consumer surplus is $15.
B) The sum of consumer surplus will be $30.
C) Waylon's consumer surplus is $0.
D) Only Willie and Waylon will purchase the cowboy hat.
E) Willie's consumer surplus is $30.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay. Merle is willing to pay $85, which is less than the price of the hat ($100), so he wouldn't buy the hat and thus has no consumer surplus, not $15.

The Price of a Cowboy Hat Is $100