Table 4-1

-Refer to Table 4-1.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $27 dollars,total consumer surplus will be
A)$0.
B)$14.
C)$26.
D)$53.

Question

Table 4-1
 
-Refer to Table 4-1.The table above lists the highest prices three consumers,Curly,Moe,and Larry,are willing to pay for a bottle of champagne.If the price of one of the bottles is $27 dollars,total consumer surplus will be
A)$0. 
B)$14. 
C)$26. 
D)$53.

Quizplus · Accepted Answer

To calculate the consumer surplus, we need to find the difference between the highest price a consumer is willing to pay and the actual price they pay. The highest prices the three consumers are willing to pay are: 
Curly = $30 
Moe = $28 
Larry = $25

Therefore, if the price of the bottle is $27, the consumer surplus for each consumer is: 
Curly = $30 - $27 = $3 
Moe = $28 - $27 = $1 
Larry = $25 - $27 = -$2

Note that Larry does not receive any consumer surplus at this price because his willingness to pay is below the market price. Therefore, the total consumer surplus is the sum of the consumer surplus for Curly and Moe: 
$3 + $1 = $4

So the best choice is C, as it gives the correct value of total consumer surplus.

Table 4-1 -Refer to Table 4-1.The Table Above Lists the Highest Prices