Shakira decided to go on a shopping trip and bought a pair of jeans. The jeans h

Question

Shakira decided to go on a shopping trip and bought a pair of jeans. The jeans had a price tag of? $129.95. When she took the jeans to the check? out, the jeans ended up being on sale? 20% off. The sales price was? $103.96, $25.99 less than the original price.

?Shakira's consumer surplus from the purchase of the jeans is

A.

exactly? $25.99 since this is the difference between the maximum price she is willing to pay for the jeans and the actual price she pays.

B.

?$129.95 since this is the price she is willing to pay.

C.

?$103.96 since this is the actual price she pays.

D.

at least? $25.99 since this is the difference between the price she is willing to pay and the actual price she?pays, but she could have be willing to pay more than? $129.95 for the jeans.

Explanation / Answer

Consumer surplus is the difference between reservation price(maximum price someone is willing to pay)and market price.

The difference between these two is $25.99.But we are not certain that the reservation price is $129.95.It can be more than that.

Answer-D

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