Question

A market has four Individuals, each considering buying a grill for his backyard. Further assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill. If the market price of grills is $300, given the scenario described, the total consumer surplus would be: None of these is true. $1, 070. $170. $200.

Answer 1

Answer:$170

Explanation:

Consumer surplus is the difference in the amount a consumer is willing to pay for a product and the actual cost of the product.

Here, Abe is willing to pay $400, while the grill actually cost $300. Consumer surplus is $100.

Butch is willing to pay $350, while the grill actually cost $300. Consumer surplus is $50.

Collins is willing to pay $320, while the grill actually cost $300. Consumer surplus is $20. And Daniel is willing to pay $200, while the grill actually cost $300. Consumer surplus is $0. Total is $100+$50+$20= $170