Question

Janine would be willing to pay $50 to see Les Misérables, but buys a ticket for only $30. Janine values the performance at:

a) $20
b) $30
c) $50
d) $10

Answer 1

Janine values the performance at $50 and paid $30 for it, so her consumer surplus is $20, which is the correct answer (a).

Step-by-step explanation:

The question being asked involves an economic concept known as consumer surplus. Janine would be willing to pay $50 to see Les Misérables, but she buys a ticket for $30. Her consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they pay. In this case, Janine's consumer surplus is $50 (her valuation of the performance) minus $30 (the price she actually pays), which is $20.