Practice Quiz

Praxis II: Economics Content Knowledge Exam Prep

Category - Economics

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Suppose that Mike is bidding on a superhero figure at a comic book convention. Mike tells the seller that he is looking for a particular figure and he is willing to pay a maximum of $150 for it. The seller says that he has the exact figure that Mike is looking for and he will sell it for $150. Which of the following statements is true about this situation?
  1. The seller will not be able to sell the figure to Mike
  2. Mike gains a $150 consumer surplus
  3. The seller gets a $150 consumer surplus
  4. Mike does not get a consumer surplus
Explanation
Answer - D - Mike does not get a consumer surplus from this agreement.

Key Takeaway: The consumer surplus is very closely related to the demand curve for the product that the consumer is in the process of purchasing. The demand curve for the product shows that very maximum prices that different consumers are willing to pay for a particular good, showing the value of that good to the consumers. The consumer’s surplus is simply the different between the maximum price that the consumer would be willing to pay versus the actually price that the consumer has to pay.
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