Question

A consumer values a house at $525,000 and a producer values the same house at $485,000. If the transaction is completed at $510,000, the transaction will generate: a. ​No surplus b. ​$25,000 worth of seller surplus and unknown amount of buyer surplus c. ​$15,000 worth of buyer surplus and $25,000 of seller surplus d. ​$25,000 worth of buyer surplus and unknown amount of seller surplus

Answer 1

c. ​$15,000 worth of buyer surplus and $25,000 of seller surplus

Step-by-step explanation:

Consumer surplus is the different between the value a consumer places on a product and the price of the product.

Consumer surplus = value of the product - price of the product

$525,000 - $510,000 = $15,000

Producer surplus is the difference between the price and the least price the seller is willing to sell his product.

Producer surplus = price - least price the seller is willing to sell his product

$510,000 - $485,000 = $25,000

I hope my answer helps you