Question

1. Welfare analysis: Basic concepts Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neitheir Consumer Producer SurplusSurplus Neither Statement Even though I was willing to pay up to $54 for a jersey sweater and even though the seller was willing to go as low as $47 in order to sell it, we couldn't reach a deal because the government imposed a price floor of $64 on the sale of sweaters. I sold a used textbook for $45, even though I was willing to go as low as $37 in order to sell it. Even though I was willing to pay up to $67 for a watch, I bought a watch for only $61

Answer 1

1. Neither

2. Producer surplus

The difference between the amount the producer is willing to supply goods for and the actual amount received by him is called producer surplus.

3. Consumer surplus

The difference between the total amount that consumers are willing and able to pay for a good and the total amount that they actually do pay is called consumer surplus