Question

On a shopping trip, Melanie decided to buy a light blue coat made from woven fabric. A tag on the coat stated that the price was $79.95. When she brought the coat to the store's sales clerk, Melanie was told that the coat was on sale, and she would pay 20 percent less than the price on the tag. After the discount was applied, Melanie paid $63.96, $15.99 less than the original price. The value of Melanie's consumer surplus from this purchase is OA. $79.95 since this is the price she is willing to pay. O B. at least $15.99 since this is the difference between the price Melanie is willing to pay for the coat and the actual price she pays, but she could have be willing to pay more than $79.95 for the coat. O C. exactly $15.99 since this is the difference between the maximum price Melanie is willing to pay for the coat and the actual price she pays. O D. $63.96 since this is the actual price she pays.

Answer 1

Ans is B) at least $15.99 since this is the difference between the price Melanie is willing to pay for the coat and the actual price she pays, but she could have been willing to pay more than $79.95 for the coat.

Explanation:

Consumer surplus is the difference between the actual price of the good and the willingness to pay for that good.