Question

You go to the grocery store to buy a gallon of milk,expecting to pay $4.50 for it. Once you get there,you discover it is on sale for $2.50. The extra $2 that you saved on the $4.50 you were willing to pay for it represents A. Consumer surplus B.productive Efficiency C. Allocative efficiency D. Producer surplus

Answer 1

A.

Consumer surplus is the benefit consumers enjoy from consuming a product, and is measured by the difference between what they would normally pay (expecting to pay) and what they actually pay. Thusly, the 2 dollar difference is your consumer surplus.