Nick wants to buy a box of crackers for $1.75. Cracker producers want to sell their product for $1.25. When Nick gets to the store, he finds that the crackers he wants to buy are marked $1.68. What is the total surplus generated from this transaction?

Total surplus will be $0.50

Explanation:

We have given consumer maximum payable amount = $1.75

Producers minimum amount to receive = $1.25

Price paid = $1.68

We have to find the total surplus

Total surplus will be equal to

Total surplus = consumer surplus + producer surplus

Consumer surplus = consumer maximum amount willing to pay - amount paid = $1.75-$1.68 = $0.07

Producer surplus = price received - producer minimum willingness to pay = $1.68 - $1.25 = $0.43

So total surplus = $0.07+$0.43 = $0.50