{"id":15703,"date":"2025-06-10T12:08:02","date_gmt":"2025-06-10T12:08:02","guid":{"rendered":"https:\/\/gaviki.com\/blog\/?p=15703"},"modified":"2025-06-10T12:08:05","modified_gmt":"2025-06-10T12:08:05","slug":"gehrig-is-willing-to-pay-90-for-a-cap-made-of-pure-irish-wool","status":"publish","type":"post","link":"https:\/\/gaviki.com\/blog\/gehrig-is-willing-to-pay-90-for-a-cap-made-of-pure-irish-wool\/","title":{"rendered":"Gehrig is willing to pay $90 for a cap made of pure Irish wool"},"content":{"rendered":"\n<p>Gehrig is willing to pay $90 for a cap made of pure Irish wool. Suppose he finds such a cap for $71 on eBay. If Gehrig buys the cap, he will have an individual consumer surplus of $71. True False<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-cyan-blue-color\"><strong>The correct answer and explanation is:<\/strong><\/mark><\/p>\n\n\n\n<p><strong>Correct Answer:<\/strong> False<\/p>\n\n\n\n<p><strong>Explanation:<\/strong><\/p>\n\n\n\n<p>The statement is False. Consumer surplus is the difference between the maximum price a consumer is willing to pay for a good or service and the actual price they pay. It represents the economic benefit a consumer receives because they were able to purchase something for less than its maximum perceived value to them.<\/p>\n\n\n\n<p>In this specific scenario:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Gehrig&#8217;s Willingness to Pay (maximum price he would pay) = $90<\/li>\n\n\n\n<li>Actual Price Paid = $71<\/li>\n<\/ul>\n\n\n\n<p>To calculate Gehrig&#8217;s individual consumer surplus, we use the formula:<br>Consumer Surplus = Willingness to Pay &#8211; Actual Price Paid<\/p>\n\n\n\n<p>Plugging in the numbers:<br>Consumer Surplus = $90 &#8211; $71 = $19<\/p>\n\n\n\n<p>Therefore, if Gehrig buys the cap for $71, his individual consumer surplus is $19, not $71. The<\/p>\n\n\n\n<pre class=\"wp-block-preformatted\">        <code>71isthepricehepaidforthecap,whichissubtractedfromhismaximumwillingnesstopay(71 is the price he paid for the cap, which is subtracted from his maximum willingness to pay (71isthepricehepaidforthecap,whichissubtractedfromhismaximumwillingnesstopay(<\/code>\n      <\/pre>\n\n\n\n<p>90) to determine the surplus ($19). The surplus represents the $19 benefit or &#8220;saving&#8221; he received by purchasing the cap for less than he was willing to spend.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Gehrig is willing to pay $90 for a cap made of pure Irish wool. Suppose he finds such a cap for $71 on eBay. If Gehrig buys the cap, he will have an individual consumer surplus of $71. True False The correct answer and explanation is: Correct Answer: False Explanation: The statement is False. Consumer [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-15703","post","type-post","status-publish","format-standard","hentry","category-quiz-questions"],"_links":{"self":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/15703","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/comments?post=15703"}],"version-history":[{"count":1,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/15703\/revisions"}],"predecessor-version":[{"id":15705,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/posts\/15703\/revisions\/15705"}],"wp:attachment":[{"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/media?parent=15703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/categories?post=15703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gaviki.com\/blog\/wp-json\/wp\/v2\/tags?post=15703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}