You go to the grocery store to buy a gallon of milk,expecting to pay $4.50 for it. Once you get there,you discover it is on sale for $2.50. The extra $2 that you saved on the $4.50 you were willing to pay for it represents A. Consumer surplus B.productive Efficiency C. Allocative efficiency D. Producer surplus
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The extra $2 that you saved on the $4.50 you were willing to pay for the gallon of milk represents "A. Consumer Surplus."
Consumer surplus is the difference between what a consumer is willing to pay for a good or service and what the consumer actually pays. In this scenario, you were willing to pay $4.50 for the gallon of milk, but since it was on sale for $2.50, you only needed to pay $2.50. The difference between the amount you were willing to pay ($4.50) and the amount you actually paid ($2.50) equals $2. This $2 is the consumer surplus, which represents the additional benefit or value you gained from purchasing the milk at a lower price than you were prepared to pay.