Answer to Question #159005 in Macroeconomics for jeremy pabia

Question

The demand for Clean-Well company’s product charges P30 per liter, how much revenue the company will earn, and how much consumer surplus will buyers benefit. Exactly, how much will buyers willing to pay for a bottle with 30 liters?

Answer 1

Consumer surplus is the maximum price that a consumer of the good is willing to pay for a purchase, minus the actual price of the good. The additional satisfaction, or utility, obtained by consumers because the actual price they pay for the good is lower than the price they would be willing to pay takes the form of consumer surplus.

To calculate consumer surplus, two prices need to be known: the actual price, and the price that consumers are willing to pay.

The company's revenue is the product of the number of products sold by the selling price.

Buyers are willing to pay for a container with 30 liters of milk

$$P30\times30=P 900$$