C) above selling price and below the demand curve. D) between the supply curve a

Question

C) above selling price and below the demand curve. D) between the supply curve and the demand curve. Save Question 8 (1 point) Consider the market for socks. The current price of a pair of plain white socks is $5.00. Two consumers, Jeff and Samir, are willing to pay $7.25 and $8.00, respectively, for a pair of plain white socks. Two sock manufacturers are willing to sell plain white socks for as little as $4.00 and $4.15 per pair.What is the total producer AND consumer surplus (i.e., social welfare) in this market? A) $23.40 B) $7.10 C) $1.85 D) $5.25 MacBook Air 44 F7 3 4

Explanation / Answer

CONSUMER SURPLUS can be defined as a difference between total amount consumer willing and able to pay or actual amount he paid for goods a d services (i.e market price)

Answer

D) $5.25

EXPLANATION:

Here are two consumer jeff and samir both are willing &able to pay $7.25 and $8.00 but the market price is only $5.00 (i.e actual amount they paid) so the difference between jeff willing to pay and market price i.e $7.25-5.00=$2.25

Jeff has consumer surplus of $2.25

Simmilarly samir has consumer surplus of $8-$5 =3

So total consumer surplus is (both jeff and samir) $2.25+$3=$5.25

D.)$5.25

PRODUCER SURPLUS can be defined as a difference between total amount the lroducer is willing to supply goods and service for and actual amount he get when he sell goods and services.

Answer

C )$1.85

Explanation

Market price is $5

Producer 1 willing to sell $4.00 per pair of socks

Producer 2 willing to sell $4.15 per pair of socks

Difference of producer 1 (market price and producer willing to sell) $5 -$4 = $1(producer surplus)

Difference of producer 2 ($5- $4.15)= $0.85(producer surplus)

Total producer surplus $1+$0.85= $1.85

C )$1.85

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