# Consider Lisa's total willingness to pay (WTP) for ice cream in the table. If the price of ice...

## Question:

Consider Lisa's total willingness to pay (WTP) for ice cream in the table. If the price of ice cream is $1.50 and Lisa aims to maximize her well-being, how many ice creams will she consume and what is the consumer surplus she obtains?

Quantity | WTP |
---|---|

0 | 0 |

1 | 3.00 |

2 | 5.50 |

3 | 7.50 |

4 | 9.00 |

5 | 10.00 |

a. 2 ice creams, consumer surplus of 2.50

b. 3 ice creams, consumer surplus of 6.50

c. 4 ice creams, consumer surplus of 7.50

d. 5 ice creams, consumer surplus of 2.50

e. None of the above

## Consumer Surplus

Consumer surplus is defined as the difference between what an individual consumer is willing to pay for an item and the price s//he actually has to pay. The consumer surplus is a benefit to the consumer and is related to the utility, or satisfaction or well-being, that the consumer expects from spending on that product.

Likewise, the producer surplus is the amount over the minimum asking price that a seller can get for his products.

## Answer and Explanation: 1

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View this answerTable with average price and average consumer surplus added:

Quantity | WTP | Average WTP | Average Consumer Surplus |

0 | 0 | 0 | 0 |

1 | 3.00 | 3.00 | 1.50 |

2 | 5.50 | 2.75 | 2.50 |

3 | 7... |

See full answer below.

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Chapter 7 / Lesson 6Learn the consumer surplus definition and see how it is determined by the people purchasing the product. Study consumer surplus examples using its formula.

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