Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.

Statement Consumer Surplus Producer Surplus Neither

a. Even though I was willing to pay up to $59 for a used textbook, I bought a used textbook for only $54.

b. I sold a used laptop for $180 on eBay last week. This week, someone offered me $32 for it.

c. I sold a jersey sweater for $30, even though I was willing to go as low as $25 in order to sell it.

The answer is:

consumer surplus Neither Producer surplus

Explanation:

Consumer Surplus is a term that is used to describe the difference between the price that consumers pay and the price that they are willing to pay.

Producer surplus is used to describe the difference between the price that a producer is willing to accept for particular commodity and the price that he/she eventually receives by selling the commodity at the market price.

In the scenario presented above, we can conclude that:

a. This is a case of consumer surplus because the consumer is willing to pay $59 but ends up paying $54. Therefore, the consumer surplus is $5.

b. This is not a case of consumer surplus or producer surplus as the used laptop has already been sold.

c. This is a case of producer surplus because the producer is willing to sell for $25 but ends up collecting $30. Therefore, the producer surplus is $5.

Answer: Consumer surplus; Neither; Producer surplus

Explanation:

Consumer Surplus is the difference between the price a consumer wants to pay for a good or service and the price the consumer eventually ends up paying for the good. Graphically, the consumer surplus it is the area that is under the demand curve and also above the price.

Producer Surplus is the difference between the price of a good or service that a producer is willing to take from the consumer who purchases the good and the price the producer ends up getting from the consumer. Graphically, the producer surplus is the area that is above the supply curve and which is below the price.

a. In this case, consumer surplus for you will be $59 - $54 = $ 5. The consumer is willing to pay $59 but ends up paying $54, so there's a consumer surplus of $5.

b. This is neither consumer surplus or producer surplus. The used laptop had already been sold.

c. In this case, the producer surplus will be $30 - $25 = $5. The producer is willing to collect $25 but ends up collecting $30. There's a producer surplus of $5.