Questions
Single choice
Amanda buys a ruby for $330 for which she was willing to pay $340. The minimum acceptable price to the seller, Tony, was $140. Tony experiences a
Options
A.producer surplus of $470 and Amanda experiences a consumer surplus of $670.
B.consumer surplus of $10 and Amanda experiences a producer surplus of $190.
C.producer surplus of $190 and Amanda experiences a consumer surplus of $10.
D.consumer surplus of $670 and Amanda experiences a producer surplus of $470.
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Step-by-Step Analysis
To evaluate this scenario, I’ll lay out what each party gains from the transaction and then inspect each answer choice.
First, compute Amanda's consumer surplus: she was willing to pay up to 340 but paid 330, so her gain is 340 − 330 = 10. This is a small positive amount, reflecting the savings she enjoys.
Next, determine Tony's producer surplus: he would have been willing to sell for as low as 1......Login to view full explanationLog in for full answers
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