Consider the market for socks.The current price of a pair of plain white socks is $5.00.Two consumers,Jeff and Samir,are willing to pay $7.25 and $8.00,respectively,for a pair of plain white socks.Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.What is the total surplus (i.e.,producer and consumer surplus)in this market?
A) $7.10
B) $5.25
C) $1.85
D) $23.40
E) $4.50

Question

Quizplus · Accepted Answer

The consumer surplus is ($7.25 - $5.00) + ($8.00 - $5.00) = $2.25 + $3.00 = $5.25. The producer surplus is ($5.00 - $4.00) + ($5.00 - $4.15) = $1.00 + $0.85 = $1.85. Total surplus is $5.25 + $1.85 = $7.10.

Consider the Market for Socks