Question

Determine where producer is experiencing a producer surplus or consumer surplus, along with the amount of the surplus.

For each scenario, decide whether it creates a producer or a consumer surplus. Then, calculate the ensuing surplus. Alice is willing to spend $30 on a pair of jeans, and has a coupon for $10 off which she found online. She selects and purchases a pair of jeans which cost $35 pre-discount. Alice experiences a Alice's surplus: $ Jeff finds some steaks for $16 for which he would have been willing to pay $20. The butcher notices the meat is near the expiration date and gives him an extra 75% off. Jeff experiences a Jeff's surplus: $ Nicole has a hockey puck from the 2018 Winter Olympic Games and puts it up for sale on eBay. She will only sell the puck if the winning bid is greater than or equal to $500. After bidding closes, the last bid stands at $501. Nicole experiences a Nicole's surplus: $

Answer 1

Correct Answers:

Alice Scenario:

Consumer Surplus. And the amount is $5

Jeff Scenario:

Consumer Surplus. And the amount is $12

Nicole Scenario:

Producer Surplus. And the amount is $1

Step-by-step explanation:

The above scenarios shows that both the consumers and the producer experience a varying degree of surpluses. And, also, the amount of the surplus varies from one person to the other person.