Question

A ticket reseller purchases a ticket to a football game for $40 and offers it for sale at a price of $75. A consumer is willing to pay $90 at most for the ticket, and purchases it at $75. What does the $50 difference (between $40 and $90) represent?

Answer 1

Answer:

profit + consumer surplus.

Explanation:

The profit obtained by the reseller is given by the difference between the amount received on sale ($75) and the purchase price ($40). The consumer surplus is determined as the difference between the willingness to pay ($90) and the actual amount paid ($75). Therefore, the difference between $90 and $40 is the profit plus the consumer surplus.