On a shopping trip, Melanie decided to buy a light blue coat made from woven fabric. A tag on the coat stated that the price was $79.95. When she brought the coat to the store's sales clerk, Melanie was told that the coat was on sale, and she would pay 20 percent less than the price on the tag. After the discount was applied, Melanie paid $63.96, $15.99 less than the original price. The value of Melanie's consumer surplus from this purchase is what?

Question

Addison Wyatt

Business

6 November, 19:57

On a shopping trip, Melanie decided to buy a light blue coat made from woven fabric. A tag on the coat stated that the price was $79.95. When she brought the coat to the store's sales clerk, Melanie was told that the coat was on sale, and she would pay 20 percent less than the price on the tag. After the discount was applied, Melanie paid $63.96, $15.99 less than the original price. The value of Melanie's consumer surplus from this purchase is what?

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Clara Yu · Answer 1

Consumer surplus is $15.99.

Explanation:

Melanie decided to buy a coat priced $79.95.

When she brought a coat to the sales clerk, she found out that it is on a 20% discount and she has to $15.99 less than the original price.

This means that her consumer surplus is at least $15.99.

The consumer surplus is the difference between the maximum price a consumer is willing to pay and the price it actually pays.

Melanie was willing to pay $79.95. But she actually paid $63.96. The difference between the two is $15.99.