Amy values a burrito at $9, and paid $7.50 for it. Dan values the burrito $8 and paid. $7.50, Mary values the burrito $10 and paid $7.50. Tom values the burrito $5 and the price is $7.50. How much is. the consumer surplus from purchasing a burrito for this group. of people?

Question

Business

Tyree Guerra

27 March, 02:18

Amy values a burrito at $9, and paid $7.50 for it. Dan values the burrito $8 and paid. $7.50, Mary values the burrito $10 and paid $7.50. Tom values the burrito $5 and the price is $7.50. How much is. the consumer surplus from purchasing a burrito for this group. of people?

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Answers (1)

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Harper Tyler · Answer 1

Consumer Surplus is the difference between the price that consumers pay and the price that they are willing to pay.

Explanation:

Consumer surplus is the additional profit for the customer in a sense that they pay less than they are willing to pay.

So consumer surplus is the difference in the price that are customer willing to pay and the price they actually pay.

For Amy:

consumer surplus = $7.50 - $9 = $1.5

For Dan:

consumer surplus = $8 - $7.5 = $0.5

For Mary:

consumer surplus = $10 - $7.5 = $2.5

For Tom:

consumer surplus = $5 - $7.5 = - $2.5

Hence the consumer surplus from these group of people are:

consumer surplus = $1.5 + $0.5 + $2.5 - $2.5 = $2