Question

In the market for a pair of shoes, Jena is willing to pay $75 for a pair while Jane is willing to pay $85 for a pair. The actual price that each must pay for a pair of shoes is $65. What is the combined amount of consumer surplus of Jena and Jane?

Options:
a. $20
b. $10
c. $160
d. $30

Answer 1

The combined consumer surplus for Jena and Jane in the shoe market scenario is $30, which is the sum of their individual consumer surpluses of $10 and $20 respectively.

Step-by-step explanation:

In economics, consumer surplus represents the difference between what a consumer is willing to pay for a good or service and the actual price they pay. In the scenario provided, Jena is willing to pay $75 but pays $65, thus her consumer surplus is $75 - $65 = $10. Jane is willing to pay $85 but also pays $65, so her consumer surplus is $85 - $65 = $20. The combined consumer surplus of Jena and Jane is the sum of their individual surpluses, which is $10 (Jena) + $20 (Jane) = $30.