Question

If the average price that cable subscribers are willing to pay for cable television is $208, but the actual price they pay is $81, how much is consumer surplus per subscriber?

Answer 1

• $127

Step-by-step explanation:

The consumer surplus per consumer is the difference between the average price the consumers are willing to pay for a product, given the utility of the product, and the they are paying.

Since they are paying $81 and they are willing to pay $208, the average surplus per consumer is:

• $208 - $81 = $127.

The surplus ot the consumer is a monetary measure of how much a purchase benefits the consumer.