A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, the transaction will generate:

a. $6,000 worth of buyer surplus and unknown amount of seller surplus

b. $4,000 worth of seller surplus and unknown amount of buyer surplus

c. $6,000 worth of buyer surplus and $4,000 of seller surplus

d. No surplus

Question

Business

Nicolas Anderson

10 January, 22:20

A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, the transaction will generate:

a. $6,000 worth of buyer surplus and unknown amount of seller surplus

b. $4,000 worth of seller surplus and unknown amount of buyer surplus

c. $6,000 worth of buyer surplus and $4,000 of seller surplus

d. No surplus

+1

Answers (1)

Know the Answer?

Joyce Yoder · Answer 1

C) $6,000 worth of buyer surplus and $4,000 of seller surplus

Explanation:

Buyer surplus is the result of the difference between the price that a buyer is willing to pay for a good, and the good's actual price: $30,000 - $24,000 = $6,000

Seller surplus is the result of the difference between the good's actual price, and the price that a seller is willing to charge for the good: $24,000 - $20,000 = $4,000