Question

Alex is willing to buy the last ticket to the Billy Bragg concert for $15, while Jake is willing to pay $25. Alex is first in line and buys a ticket for $15. He then resells his ticket to Jake for $20. By reselling the ticket instead of going to the concert himself, Alex caused:

Answer 1

A) the sum of the consumer and producer surplus to increase.

Step-by-step explanation:

Here are the options to this question :

A) the sum of the consumer and producer surplus to increase. B) the sum of the consumer and producer surplus to decrease. C) a deadweight loss of $5. D) consumer surplus to decrease and producer surplus to increase.

Producer surplus is the difference between the price of a good and the least amount the seller is willing to sell.

Consumer surplus is the difference between the willingness to pay of a consumer and the price.

When Alex buys the ticket, his consumer surplus is $15 - $15 = 0

When Alex sells the ticket to Jake, his producer surplus is $20 - $15 = $5

Jakes consumer surplus is $25 - $20 = $5

Both producer and consumer surplus increased.

I hope my answer helps you