Question

Identify whether each of the following statements best illustrates the concept of consumer surplus, producer surplus, or neither.

Statement	Consumer Surplus	Producer Surplus	Neither
I paid $50 for a jersey sweater last week. This week, the same shop is selling sweaters for $43.
I sold a used textbook for $43, even though I was willing to go as low as $33 in order to sell it.
Even though I was willing to pay up to $82 for a watch, I bought a watch for only $72.

Answer 1

Answer : 1) The answer is Neither.

Because I bought the sweater at $50 but the current price of that same sweater is $43. So, here neither occurs consumer surplus and nor occurs producer surplus. Therefore, "Neither" is the correct answer.

2) The answer is Producer surplus.

Because I sold the textbook at $43 but I was ready to sell it at $33. So, here I am getting producer surplus. Therefore, "Producer surplus" is the correct answer.

3) The answer is Consumer surplus.

Because I am ready to pay $82 but I pays $72 for watch. So, here I am getting consumer surplus. Therefore, "Consumer surplus" is the correct answer.