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25 April, 08:23

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is producer surplus?

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  1. 25 April, 11:22
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    Consumer's surplus is $11

    Explanation:

    What is a consumer's surplus?

    Consumer's surplus is the difference between amount (price) that a buyer (consumer) eventually pays to acquire a product and the amount he was willing to pay.

    There is a surplus if the amount that a consumer pays to acquire a product is less than he was willing to pay.

    In the question, the consumer was willing to pay $79 but he eventually paid $68

    Therefore, consumer's surplus is $79 - $68

    $11
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