A person is willing to pay $50 per visit for physical therapy, but she pays $35 per visit. This person receives a consumer surplus of $85 per visit. Is this true or false/
False: the surplus is 15.00. What you willing to pay 50-what you paid 35=15
To determine if this statement is true or false, we need to understand the concept of consumer surplus and how it relates to the given information.
Consumer surplus refers to the difference between what a consumer is willing to pay for a product or service and the actual price they pay. It represents the additional benefit gained by the consumer from purchasing at a price lower than their maximum willingness to pay.
In this case, the person is willing to pay $50 per visit for physical therapy, but they actually pay $35 per visit. The consumer surplus can be calculated as the difference between the maximum willingness to pay and the actual price paid:
Consumer Surplus = Maximum Willingness to Pay - Price Paid
So, in this case, the consumer surplus is calculated as:
Consumer Surplus = $50 - $35
Consumer Surplus = $15
According to the given information, the person receives a consumer surplus of $85 per visit. Since this value of $85 contradicts the previous calculation of $15, the statement is false.
Therefore, the statement is false.
True.
Consumer surplus is defined as the difference between what a consumer is willing to pay for a product or service and what they actually pay. In this case, the person is willing to pay $50 per visit for physical therapy, but they only pay $35 per visit.
Consumer surplus = Willingness to pay - Actual payment
= $50 - $35
= $15
Hence, the person receives a consumer surplus of $15 per visit. However, the given statement mentions that the person receives a consumer surplus of $85 per visit, which is incorrect. Therefore, the statement is false.