Mister Jones was selling his house and Mister Smith was buying a house.  Jones decided he would take no less than​ $200,000 and Smith would pay no more than​ $215,000. After some​ negotiation, Smith purchased the house for​ $201,000. Smith's consumer surplus is

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Part 1

A.

​$205,000.

B.

​$1,000.

C.

​$15,000.

D.

​$14,000.

Consumer surplus is the difference between the maximum price a buyer is willing to pay and the actual price they pay. In this case, Mr. Smith was willing to pay a maximum of $215,000, but he purchased the house for $201,000.

To calculate Smith's consumer surplus:

\[
\text{Consumer Surplus} = \text{Maximum Price Willing to Pay} - \text{Actual Price Paid}
\]

\[
\text{Consumer Surplus} = 215,000 - 201,000 = 14,000
\]

Thus, the correct answer is:

**D. $14,000.**

Would you like further details or explanations on this topic? Here are some related questions:

1. What is producer surplus and how does it relate to consumer surplus?
2. Can consumer surplus be negative?
3. How do market dynamics affect consumer and producer surplus?
4. How would the negotiation process affect both parties' surpluses?
5. What are some examples of consumer surplus in everyday life?

**Tip:** Consumer surplus can be used as a measure of consumer benefit from market transactions.

Mister Jones was selling his house and Mister Smith was buying a house. Jones decided he would take no less than $200,000 and Smith would pay no more than $215,000. After some negotiation, Smith purchased the house for $201,000. Smith's consumer surplus is:

A. $205,000.
B. $1,000.
C. $15,000.
D. $14,000.

Learn how to calculate consumer surplus with a real-world example. Mr. Smith buys a house from Mr. Jones for $201,000, while his maximum willingness to pay was $215,000. This problem covers concepts like consumer surplus and basic economic transactions, suitable for students in Grades 9-12.

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