Consumer and Producer Surplus

Read this article and attempt several practical problems related to consumer and producer surplus by answering the "Try It" quiz questions. Check your answers after you're done.

4. TRY IT

4.1. Answer to Try It

    • a consumer surplus of $2,500.00.
      Correct. The difference between what Kay is willing to pay and what he actually pays is his consumer surplus: ($25,000 - $22,500 = $2,500)
    • a producer surplus of $2,500.00.
      Incorrect Kay is not a producer but a consumer and therefore the difference between what Kay is willing to pay and what he actually pays is his consumer surplus.
    • a social surplus of $25,000.00.
      Incorrect Kay is not a producer but a consumer and therefore the difference between what Kay is willing to pay and what he actually pays is his consumer surplus.