Question

Tim mows neighborhood lawns for extra money. Suppose that he would be willing to mow one lawn for ​$12​, a second lawn for ​$15​, and a third lawn for ​$23. Also suppose that three neighbors are interested in having their lawns mowed. Mrs. Jones would be willing to pay ​$30 to have her lawn​ mowed, Mr. Wilson would be willing to pay ​$26​, and Ms. Smith would be willing to pay ​$23.

Considering Mrs.​ Jones, Mr.​ Wilson, and Ms. Smith​ together, what will be their consumer​ surplus?  ​

Answer 1

$29 will be their consumer surplus.

Consumer surplus is the difference between how much a consumer is willing to pay and how much a consumer actually does pay.

$12.00 + $15.00 + $23.00 = $50.00 (How much the consumer actually pays)

$23.00 + $26.00 + $30.00 = $79.00 (How much the consumer is willing to pay)

$79.00 - $50.00 = $29.00 (Consumer surplus)