Question

Suppose that Nike creates a new UK t-shirt for the basketball season. When asked how much they w ould be willing to pay for this new shirt: Logan says he is willing to pay $30 Shelby says she is willing to pay $27 Alex says he is willing to be $25 Luke says he is willing to pay $18 Nigel says he is w illing pay $18 Emily says she is willing to pay $10 If the shirts end up selling for a price of $20, what is the total amount of consumer surplus that will occur in the market

Answer 1

$22

Step-by-step explanation:

consumer surplus is the difference between the price that consumers are willing and able to pay for a good versus the selling of the good:

• Logan = $30 - $20 = $10
• Shelby = $27 - $20 = $7
• Alex = $25 - $20 = $5
• total = $22

Since Luke, Nigel and Emily probably didn't buy the t-shirts, they are not included in this calculation.

The only way consumer surplus can be negative is that consumers are forced to purchase an essential good, but that is not the case here.