Question

When you are willing to pay $5 for a hamburger but you pay $4 for it, your consumer surplus for the hamburger is:?

Answer 1

$1. A "consumer surplus" is the difference between what a customer is WILLING to pay and what they ACTUALLY pay. You are willing to pay $5 on a hamburger, but you only spend $4. There is a difference between what you would've paid and what you did pay -- meaning, the difference between five dollars and four dollars. 5 minus 4 is 1. The consumer surplus is one dollar.