The Value of Consumer Surplus: Empowering Your Purchases

What is the value of consumer surplus for Lucinda's new GPS system purchase?

A) $175

B) $250

C) $325

D) $150

Answer:

The value of consumer surplus for Lucinda's new GPS system purchase is $75.

Consumer surplus is a key concept in economics that represents the difference between the price a consumer is willing to pay for a product and the actual price they pay. In this case, Lucinda's willingness to pay for the GPS system is $250, but she only paid $175 for it, resulting in a consumer surplus of $75.

Consumer surplus is a measure of the economic welfare that consumers gain from purchasing a product at a price lower than what they are willing to pay. It reflects the value that consumers place on a product beyond the price they actually pay for it, symbolizing the satisfaction and utility they derive from the purchase.

By understanding consumer surplus, consumers like Lucinda can make informed decisions about their purchases and recognize the additional value they gain from buying products below their maximum price threshold. This knowledge empowers consumers to optimize their spending, maximize their satisfaction, and make the most of their resources.