Question

Amy buys a new dog for $150. She receives consumer surplus of $100 on her purchase. Her willingness to pay is:

a) $50
b) $150
c) $100
d) $200

Answer 1

Consumer surplus is the difference between the price a consumer is willing to pay for a product and the actual price they pay.

Step-by-step explanation:

Consumer surplus is the difference between the price a consumer is willing to pay for a product and the actual price they pay. In this case, Amy bought a dog for $150 and received a consumer surplus of $100.

Her willingness to pay is therefore $250 ($150 + $100), which is the amount she would have been willing to pay for the dog if she didn't receive any discount.

So the correct answer is (d) $200.