Amy buys a new dog for $1500. She receives consumer surplus of $300 on her purchase. Her willingness to pay is: A. $300 B. $1500 C. $1800 D. $1200
Question
Amy buys a new dog for 300 on her purchase. Her willingness to pay is: A. 1500 C. 1200
Solution
The answer is C. $1800.
Here's the step-by-step explanation:
Consumer surplus is the difference between what a consumer is willing to pay for a good or service and what they actually pay.
In this case, Amy's consumer surplus is 1500 for the dog.
So, to find out how much she was willing to pay, you add the price she paid (300).
300 = $1800.
So, Amy was willing to pay $1800 for the dog.
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