-Refer to Figure 5.5 to answer this question.If partial units cannot be purchased,what is the value of total consumer surplus at a price of $5?
A)$10.
B)$12.
C)$20.
D)$35.

Question

-Refer to Figure 5.5 to answer this question.If partial units cannot be purchased,what is the value of total consumer surplus at a price of $5?
A)$10. 
B)$12. 
C)$20. 
D)$35.

Quizplus · Accepted Answer

At a price of $5, consumers are willing to buy 5 units of the good. However, since partial units cannot be purchased, they can only buy 4 units. The consumer surplus is the difference between the price consumers are willing to pay and the price they actually pay. In this case, consumers are willing to pay $5 for each of the 5 units, for a total of $25. However, they only pay $4 x $5 = $20 for the 4 units they actually buy. Therefore, the consumer surplus is $25 - $20 = $5.