Question

Shannon buys a new CD player for her car for $135. She receives consumer surplus of $25 on her purchase. Her willingness to pay is $25.

a) True
b) False

Answer 1

Shannon's willingness to pay for the CD player is $25, and she received a consumer surplus of $25.

Step-by-step explanation:

A consumer surplus occurs when a consumer is willing to pay a higher price for a product than what they actually have to pay. In this case, Shannon's willingness to pay is $25 for the CD player, but she only paid $135. The consumer surplus is the difference between what Shannon was willing to pay and what she actually paid, which is $25. Therefore, the statement is true.