Question

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.

Statement
Consumer Surplus
Producer Surplus
Neither
Even though I was willing to pay up to $67 for a used textbook, I bought a used textbook for only $58.
I sold a jersey sweater for $31, even though I was willing to go as low as $24 in order to sell it.
I sold a used laptop for $200 on eBay last week. This week, someone offered me $34 for it.

Answer 1

Consumer surplus

Producer surplus

Neither

Step-by-step explanation:

The producer surplus is the difference between the lowest price that a producer is willing to accept and the price he actually gets.

Consumer surplus is the difference between the maximum price that a consumer is willing to pay and the price it actually has to pay.

The buyer was willing to pay $67 for the textbook but it actually has to pay $58. Here, the consumer surplus is $9.

The seller is willing to receive $24 for a sweater but he actually gets $31. Here, the producer surplus is $7.

The seller sold the laptop for $200, the lowest price that the seller is willing to accept is not given. Nor the maximum price that the buyer was willing to pay is given. So it is neither consumer surplus nor producer surplus.