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Difficulty: EasyConcept and Calculation of Consumer Surplus

A consumer is willing to pay a maximum of ₦8,500 for a new textbook, but purchases it in the market for ₦5,800. What is the value of the consumer surplus in Naira?

Answer: 2700 Naira

Answer

The consumer surplus is ₦2,700.
Consumer surplus is calculated by deducting the actual price paid from the maximum price the consumer was willing to pay: ₦8,500 - ₦5,800 = ₦2,700.

Step-by-Step Solution

1
Identify maximum willingness to pay and actual price
Maximum Willingness to Pay = ₦8,500; Market Price = ₦5,800
Consumer surplus is determined by comparing what the buyer is willing to pay against the market price.
2
Subtract the market price from the maximum willingness to pay
Consumer Surplus = ₦8,500 - ₦5,800 = ₦2,700
Consumer Surplus represents the financial gain or net benefit enjoyed by the consumer.

Key Concept

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.
Estimated Time:45s
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Topics

Concept and Calculation of Consumer Surplus

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