Question 45

The consumer surplus is $8.

The consumer surplus is calculated as the difference between what a shopper is willing to pay and what they actually pay. In this case, the shopper was willing to pay $25 but bought the shirt for $17, resulting in a consumer surplus of $8.

A) The producer surplus is $25

This option is incorrect because producer surplus refers to the difference between the amount a producer receives for a good and the minimum amount they are willing to accept. In this scenario, the information provided does not support the idea that the producer surplus is $25, as it does not account for the actual selling price or willingness of the producer.

B) The consumer surplus is $25

This option is incorrect because the consumer surplus is not the total amount the shopper was willing to pay, but rather the difference between that amount and the price paid. Since the shopper paid $17 and was willing to pay $25, the consumer surplus is $8, not $25.

C) The producer surplus is $17.

This option is incorrect as it misrepresents the concept of producer surplus. The producer surplus is not simply the price at which the item is sold. Without additional information about the minimum acceptable price for the producer, we cannot conclude that the producer surplus is $17.

D) The consumer surplus is $8.

This option is correct as it accurately reflects the calculation of consumer surplus, which is the difference between the willingness to pay ($25) and the actual payment ($17). Thus, the consumer surplus is indeed $8.

Conclusion

The correct answer, D, accurately identifies the consumer surplus as $8, derived from the difference between the price the shopper was willing to pay and the actual price paid. All other options misinterpret the definitions of producer and consumer surplus, leading to incorrect conclusions. Understanding these concepts is essential for analyzing consumer behavior in economic contexts.