Mary purchased a stuffed animal toy for $5.After a few weeks,someone offered her $100 for the toy.Mary refused.One can conclude that Mary's consumer surplus from the toy is

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good and the actual price paid. In this case, Mary is willing to pay at least $100 for the toy, but she only paid $5. Therefore, her consumer surplus is at least $95, which means she values the toy at least $95 more than what she paid for it. Option A is not possible because Mary would not have bought the toy in the first place if her consumer surplus was less than $5. Option C is not correct because Mary did not agree to sell the toy for $100, so her consumer surplus cannot be that amount. Option D is incorrect because that would be the total amount Mary could sell the toy for, not her consumer surplus.

Mary Purchased a Stuffed Animal Toy for $5