Suppose the market price is $5.There are three consumers in the market.The consumer who purchases the first unit of output is willing to pay $12;the consumer purchasing the second unit of output is willing to pay $8;and the consumer buying the third unit of output is willing to pay $7.Total consumer surplus is:

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. Since there are three consumers in the market, the consumer surplus for each unit of output is:

- $7 for the first unit (since the market price is $5 and the first consumer was willing to pay $12).
- $3 for the second unit (since the market price is $5 and the second consumer was willing to pay $8).
- $2 for the third unit (since the market price is $5 and the third consumer was willing to pay $7).

Adding up the consumer surplus for each unit gives a total of $7 + $3 + $2 = $12. Therefore, the correct choice is C) $12.

Suppose the Market Price Is $5