A market has four individuals considering buying a grill for his backyard.Further assume that grills come in only one size and model.Abe considers himself a grill-master,and finds a grill a necessity,so he is willing to pay $400 for a grill.Butch is a meat-lover,honing his grilling skills,and is willing to pay $350 for a grill.Collin just met the girl of his dreams,and she loves a good grilled steak,so in his effort to impress her he is willing to pay $320 for a grill.Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp,so he is willing to pay $200 for a grill.
If the market price of grills is $300,given the scenario described,the total consumer surplus would be:
A)$170.
B)$1,070.
C)$200.
D)None of these is true.

Question

Quizplus · Accepted Answer

Abe and Butch will buy the grill since their willingness to pay ($400 and $350 respectively) is above the market price of $300. Abe's consumer surplus is $100 ($400 - $300) and Butch's is $50 ($350 - $300). Collin and Daniel will not buy since their willingness to pay is below or equal to the market price. The total consumer surplus is $100 + $50 = $150.

A Market Has Four Individuals Considering Buying a Grill for His