Question

Suppose there are only three consumers in the market for a good and each consumer will buy only one unit of the good. Their individual economic values for the good are $26, $28, and $32, respectively. If the market price for the good is $26, what is the total consumer surplus for the three buyers?

Answer 1

$8

Step-by-step explanation:

consumer surplus refers to the difference between what a consumer is willing and able to pay for a good or service, and the actual price of the good or service.

In this case, all 3 consumers are willing and able to pay $26 for the good.

total consumer surplus = ($26 - $26) + ($28 - $26) + ($32 - $26) = $0 + $2 + $6 = $8