Question

If a buyer's willingness to pay for a new car is Rs. 200,000 and she is able to actually buy it for Rs. 180,000 her consumer surplus is __________.

• A. Rs. 18,000
• B. Rs. 20,000
• C. Rs. 2,000
• D. Rs.0.

Answer 1

The correct option is B Rs. 20,000

Consumer surplus is the difference between the price that the consumer is willing to pay and the p[rice consumer actually pays.

Therefore,

Consumer surplus = Amount Willing to pay - Amount paid

= 2,00,000 - 1,80,000

= Rs-20,000.