Question

Kelly is willing to pay $5.20 for a gallon of gasoline. The price of gasoline at her local gas station is $3.80. If she purchases ten gallons of gasoline, then Kelly's consumer surplus is A. $3.80. B. $52. C. $14. D. $1.40.

Answer 1

To find the total consumer surplus you must subtract the price that the customer was willing to pay from the actual price payed, then multiply that value by the amount of items purchased. For each item the consumer surplus would be $5.20 - $3.80 = $1.40. Since she purchased ten gallons, you multiply $1.40 by 10. So the total consumer surplus is C. $14