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True or False If a local Christmas tree farmer is earning a producer surplus on each Christmas tree he sells then his customers cannot enjoy any consumer surplus on the Christmas trees they buy?
Wiki User
∙ 14y ago
False. It depends on the price consumers are willing to pay for the producer's Christmas tree. For example, if the producer is willing to sell his tree at $3 but the market price is $5, then the surplus for the producer is $2. Say, a consumer is willing to buy the tree at $15, then the consumer surplus us $10. Remember that the consumer surplus is the are under the demand curve and above the horizontal line passing through the equilibrium price. As long as this area exists, then it is possible for consumers to enjoy a consumer surplus.
Wiki User
∙ 14y ago
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