Question

Pedro wants to buy a new car. the most he is willing to pay is $21,000. if he finds a car for $18,000, what will his consumer surplus be?

Answer 1

I would say his consumer surplus would be $21,000-18,000 = $3000. In other words, I think it would be the difference between what he was prepared to spend and what he actually spent so the difference would be to his advantage since he would have saved the $3000.