If the university president valued a parking space close to the administration building at $500 and paid $30 for a parking permit, he would receive consumer surplus equal to:
If the university president valued a parking space close to the administration building at $500 and paid $30 for a parking permit, he would receive consumer surplus equal to:
$500.
$530.
$30.
$470.
Consumer surplus is calculated as the difference between what a consumer is willing to pay for a good or service and what they actually pay for it.
In this case, the university president values the parking space at $500 and pays $30 for the parking permit.
To calculate the consumer surplus:
Consumer Surplus = Value - Amount Paid Consumer Surplus = $500 - $30 = $470
Therefore, the consumer surplus is equal to $470.