A student in Lagos is willing to pay a maximum of \text{\mathbb{N}}2,500 for a transit pass, but the prevailing market price is \text{\mathbb{N}}1,600. What is the consumer surplus derived by the student from purchasing the pass?
- ₦900Answer
- B₦4,100
- C₦2,500
- D₦1,600
Answer
The consumer surplus derived by the student is ₦900.
Consumer surplus is defined as the economic benefit gained by a consumer when they pay less for a product than the maximum amount they were willing to pay. Calculating \text{\mathbb{N}}2,500 - \text{\mathbb{N}}1,600 yields \text{\mathbb{N}}900, which accurately reflects this net monetary gain.
Step-by-Step Solution
Key Concept
Consumer surplus is the net monetary gain or benefit a consumer receives when paying a market price that is lower than the maximum price they were willing to pay.
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