There are three identical vases available for purchase. Buyer 1 values a vase at Rs30, buyer 2 values it at Rs25, and buyer 3 values it at Rs20. If the selling price is set at Rs25, how many vases will be sold, and what will be the total consumer surplus in this market?

Show Answers

All three vases will be sold, with a total consumer surplus of Rs80.Only one vase will be sold, resulting in a consumer surplus of Rs5.Just one vase will be purchased, and the consumer surplus will be Rs30.All three vases will be sold, but there will be no consumer surplus.Two vases will be sold, and the total consumer surplus will be Rs5.

Explanation

At a price of Rs25, Buyer 1 (willing to pay Rs30) and Buyer 2 (willing to pay Rs25) will purchase the vases, while Buyer 3 (willing to pay Rs20) will not. Therefore, two vases are sold. The consumer surplus is calculated as the difference between the buyers' willingness to pay and the price: (Rs30 - Rs25) + (Rs25 - Rs25) = Rs5 + Rs0 = Rs5.