Asked by Gurwinder Bhullar on Jun 26, 2024
Verified
Refer to Scenario 8-1. If Erin pays Ernesto $90 to clean her house, Erin's consumer surplus is
A) $80.
B) $30.
C) $20.
D) $10.
Consumer Surplus
The gulf between the aggregate amount consumers are willing to allocate for a good or service and what they actually end up paying.
Producer Surplus
The variance between the minimum amount producers are prepared to take for a product and the actual payment they get.
Opportunity Cost
The cost of forgoing the next best alternative when making a decision or choosing between multiple options.
- Grasp the effect taxes have on consumer and merchant conduct, with a special focus on market involvement and the health of the economy.
Verified Answer
NB
Nestle ButlerJun 30, 2024
Final Answer :
D
Explanation :
Erin's consumer surplus is the difference between what she is willing to pay ($100) and what she actually pays ($90), which equals $10.
Learning Objectives
- Grasp the effect taxes have on consumer and merchant conduct, with a special focus on market involvement and the health of the economy.