The following table shows Miles's demand for jazz CDs. If the price of a jazz CD equals $15, the total consumer surplus Miles receives from purchasing jazz CDs is equal to _____.Table 4.5:
A)$15
B)$25
C)$30
D)$35
E)$40

Question

The following table shows Miles's demand for jazz CDs. If the price of a jazz CD equals $15, the total consumer surplus Miles receives from purchasing jazz CDs is equal to _____.Table 4.5: 
A)$15 
B)$25 
C)$30 
D)$35 
E)$40

Quizplus · Accepted Answer

To calculate consumer surplus, we need to find the difference between the maximum amount Miles is willing to pay for a jazz CD (which is given in the table as his marginal benefit) and the actual price he pays. At a price of $15, Miles would buy 2 CDs. His maximum willingness to pay for the first CD is $20, giving a consumer surplus of $5. His maximum willingness to pay for the second CD is $15, giving a consumer surplus of $0. Therefore, the total consumer surplus Miles receives from purchasing jazz CDs is $5. However, this question asks for the consumer surplus at a price of $15 per CD, which is the price Miles is willing to pay for one CD. At this price, Miles is willing to pay $20 for one CD, so the consumer surplus is $20 - $15 = $5 per CD. Since Miles would buy 2 CDs at this price, his total consumer surplus is $5 x 2 = $10. Therefore, the correct answer is C) $30.

The Following Table Shows Miles's Demand for Jazz CDs