If Johnny is willing to pay up to $3 for an ice-cream cone but she actually pays $1 for it. The consumer surplus of the ice-cream cone for Johnny
A) is $1.
B) is $2.
C) is $4.
D) cannot be determined without information about the market structure.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price paid. In this case, Johnny is willing to pay $3 but pays only $1. Therefore, the consumer surplus is $2 ($3 - $1 = $2). Thus, the correct answer is (B).

If Johnny Is Willing to Pay Up to $3 for an Ice-Cream