Question

Suppose that the price of a cashmere sweater is​ $100 and​ Jean's marginal benefit from a cashmere sweater is​ $300. If Jean buys 1 cashmere​ sweater, what is her consumer​ surplus? ​Jean's consumer surplus is ​$nothing

Answer 1

$200

Step-by-step explanation:

Given that,

Price of sweeter = $100

Marginal benefit from sweeter = $300

Recall that

Consumer surplus refers to the marginal benefits gotten from a good in excess of the price of paid for that good, summed over the total quantity of goods bought.

Since only one sweeter was bought

Thus,

Consumer surplus = (marginal benefit - price) ÷ quantity bought

= (300 - 100) ÷ 1

= $200