Question

At the end of the term, Vicky wants to sell her economics textbook for at least $25, otherwise she would keep it. George is looking to buy a textbook because he's taking the class next term, and he is willing to pay at most $60. If Vicky agrees to sell the textbook to George for $45:

Answer 1

Answer:

c) George's consumer surplus is $15 and Vicky's producer surplus is $20.

Explanation:

Here are the options to this question:

: a) George's consumer surplus is $60 and Vicky's producer surplus is $25. b) George's consumer surplus is $20 and Vicky's producer surplus is $15. c) George's consumer surplus is $15 and Vicky's producer surplus is $20. d) George's consumer surplus is $45 and Vicky's producer surplus is $45. 

Consumer surplus is the difference between the willingness to pay of a consumer and the price of the product.

Consumer surplus = willingness to pay - price

For George: $60 - $45 = $15

Producer surplus is the difference between the price of a good and the least amount a seller is willing to sell his product.

Production suplus = price - least amount

$45 - $25 = $20.

I hope my answer helps you