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20 January, 18:02

Carolina is trying to sell her car, and the lowest amount she is willing to accept is $2,000. Abdul is interested in buying the car, and although he is willing to pay $2,500, he negotiates a price of $2,100. How much consumer surplus does Abdul attain, and what is the total surplus?

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  1. 20 January, 18:57
    0
    How much consumer surplus does Abdul attain, and what is the total surplus?

    Abdul's consumer surplus = $400 total surplus = $500

    Explanation:

    Abdul's consumer surplus = price he is willing to pay for the car - purchase price = $2,500 - $2,100 = $400

    Carolina's supplier surplus = sales price - minimum price that she would accept = $2,100 - $2,000 = $100

    Total surplus = consumer surplus + supplier surplus = $400 + $100 = $100
  2. 20 January, 19:34
    0
    Abdul's surplus = $400

    Total surplus=$500

    Explanation:

    Consumer surplus can be defined as the amount a consumer is willing to pay and the amount he actually paid (which is usually less).

    Given:

    Carolina willing selling price=$2,000

    Abdul willing buying price=$2,500

    Abdul negotiated price=$2,100

    Abdul is willing to pay $2,500 but he negotiated $2,100

    Abdul's surplus = $2,500-$2,100

    =$400

    Total surplus = Abdul's willing price - carolilina's willing price

    Total surplus = $2,500 - $2,000

    = $500
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