If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

Question

BlackTom AI · Accepted Answer

Consumer surplus is defined as the difference between the maximum amount a consumer is willing to pay for a good (their value or willingness to pay) and the price they actually pay.

Option 1 (True): If Darby values the soccer ball at $50 and pays $40, the surplus is $50 − $40 = $10. This aligns with the standard CS calculation where willingness to pay exceeds price by the amount of surplus.

Option 2 (False): If this statement were false, it would imply either that the willingness to pay does not exceed the price, or that the surplus is calculated differently. However, here the willingness to pay is clearly $50 and the price is $40, so CS is the positive difference between those two figures, which is $10.

Additional clarification: Consumer surplus depends on the consumer’s personal valuation, not on the cost to produce the item or its actual selling price in isolation. In this scenario, the valuation ($50) is higher than the paid price ($40), producing a positive surplus. If the price were higher than the valuation, CS would be zero or negative, and the consumer would not gain surplus from the transaction. The math here follows CS = Willingness to pay − Price, so the result would be $50 − $40 = $10, assuming the stated values hold true.

If Darby values a soccer ball at $50, and she pays $40 for it, her consumer surplus is $10.

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