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Natasha, Nelson, and Nikolai are all looking to buy flashlights for a camping trip. Natasha is willing to pay $4, Nelson is willing to pay $10, and Nikolai is willing to pay $20. If the actual price of a flashlight turns out to be $9, what is the total consumer surplus for these three shoppers?1 point$12$260$7

Question

Natasha, Nelson, and Nikolai are all looking to buy flashlights for a camping trip. Natasha is willing to pay 4,Nelsoniswillingtopay4, Nelson is willing to pay 10, and Nikolai is willing to pay 20.Iftheactualpriceofaflashlightturnsouttobe20. If the actual price of a flashlight turns out to be 9, what is the total consumer surplus for these three shoppers?1 point1212260$7

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Solution

Consumer surplus is the difference between what a consumer is willing to pay and what they actually pay.

  1. Natasha is willing to pay 4,butthepriceis4, but the price is 9. Since she is not willing to pay this much, she does not buy the flashlight and her consumer surplus is $0.

  2. Nelson is willing to pay 10,andthepriceis10, and the price is 9. He buys the flashlight and his consumer surplus is 1010 - 9 = $1.

  3. Nikolai is willing to pay 20,andthepriceis20, and the price is 9. He buys the flashlight and his consumer surplus is 2020 - 9 = $11.

So, the total consumer surplus for these three shoppers is 0(Natasha)+0 (Natasha) + 1 (Nelson) + 11(Nikolai)=11 (Nikolai) = 12.

This problem has been solved

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