First,label the following scenarios as to whether they would create a producer or consumer surplus. Then, after you have labeled each scenario, calculate the ensuing surplus.

Alice is willing to spend $30 on a pair of jeans, and has a coupon for $10 off she found online. She selects and purchases a $35 pair of jeans, pre-discount.

http://www.economicsonline.co.uk/Competitive_markets/Consumer_and_producer_surplus.html

no

Producer surplus

To determine whether a scenario creates a producer surplus or consumer surplus, we need to understand the concept of surplus. In economics, a surplus refers to the additional benefit or value that a consumer or producer receives beyond what they paid or incurred.

In this scenario, Alice is willing to spend $30 on a pair of jeans and has a coupon for $10 off. Let's analyze the situation step by step:

1. Alice's willingness to spend: Alice is willing to spend $30 on a pair of jeans.
2. Coupon discount: Alice has a coupon for $10 off the jeans.
3. Purchase price: The pair of jeans she selects costs $35 before the discount.

Labeling the scenario:

Producer Surplus: The producer surplus represents the additional benefit or value that the producer receives beyond the cost of production. In this case, there is no relevant information given about the cost of production or the seller's benefit. Thus, we cannot determine the producer surplus.

Consumer Surplus: The consumer surplus represents the additional benefit or value that the consumer receives beyond what they pay for a product. In this case, we can calculate the consumer surplus.

Calculation of Consumer Surplus:

Consumer Surplus = Willingness to Pay - Actual Payment

Willingness to Pay = $30 (The price Alice is willing to spend on a pair of jeans)
Actual Payment = $35 (The price she pays after the $10 discount)

Consumer Surplus = $30 - $35 = -$5

Based on the calculation, the consumer surplus is -$5, which means Alice did not receive any surplus. In fact, she ended up paying $5 more than what she was willing to spend.

Please note that in some cases, it may not be possible to determine the producer surplus without additional information about production costs. However, in this particular scenario, we do not have sufficient information to calculate the producer surplus.