Answer :
The consumer surplus is $5.
Consumer surplus is defined as the amount saved based on the estimated value and actual paid price. It is the difference between the amount that customer wants to pay and the amount that customer has to pay based on the final price.
Leon is willing to pay $10. The discount offered of $10 item is 50%. Hence, the final price will be -
Final price = 10 - 50%×10
Final price = 10 - 5
Final price = 5
Surplus amount = 10 - 5
Surplus amount = $5
Thus, the surplus amount for Leon is $5.
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The complete question is -
Determine the amount of consumer surplus generated: Leon goes to the clothing store to buy a new T-shirt, for which he is willing to pay up to $10. He picks out one he likes with a price tag of exactly $10. When he is paying for it he learns that the T-shirt has been discounted by 50%
