Paul goes to Sportsmart to buy a new tennis racquet.He is willing to pay $200 for a new racquet, but buys one on sale for $125.What is Paul's consumer surplus from the purchase?

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what the consumer is willing to pay and what they actually pay. 
In this case, Paul is willing to pay $200 but only pays $125, so his consumer surplus is:

Consumer Surplus = Willingness to pay - Actual price paid
Consumer Surplus = $200 - $125
Consumer Surplus = $75

Therefore, the correct answer is D) $75.

Paul Goes to Sportsmart to Buy a New Tennis Racquet