Asked by Alondra Aguirre on Jul 20, 2024
Verified
Larry purchases a book for $10, and his consumer surplus is $3. How much is Larry willing to pay for the book?
A) $10
B) $6.5
C) $13
D) $7
Consumer Surplus
The gap between the total monetary amount consumers are willing to allocate for a product or service and the amount they ultimately allocate.
Willingness to Pay
The highest price a person is willing to pay for a product or service, indicating how much they value it.
- Understand the concept of consumer surplus and how to calculate it.
- Comprehend the relationship between market price, consumer willingness to pay, and consumer surplus.
Verified Answer
AR
Antonia RomeroJul 22, 2024
Final Answer :
C
Explanation :
Consumer surplus is the difference between what a consumer is willing to pay for a good and what the consumer actually pays. If Larry's consumer surplus is $3 and he paid $10 for the book, then he was willing to pay $10 + $3 = $13 for the book.
Learning Objectives
- Understand the concept of consumer surplus and how to calculate it.
- Comprehend the relationship between market price, consumer willingness to pay, and consumer surplus.