1. Imagine that Donovan is willing to pay (WTP) $10, Rudy is WTP $8, Mike is WTP $6 and Royce is WTP $4 for one gallon of gas.
If the market price of gas is $4.50 per gallon, what is the total consumer surplus for these buyers? (If they are willing to purchase a gallon of gas, assume it will always be available to them at the market price)
a) $1.50
b) $3.50
c) $5.50
d) $10
e) $10.50
f) $28
2. Which area(s) represent(s) producer surplus at the equilibrium price and quantity?
a) A
b) B
c) A+B
d) A+B+C
e) D