Close Explanation Explanation: Consumer surplus is the difference between a buyer's willingness to pay {what the item is worth to the buyer) and what the buyer actually pays. Alex values his first bottle of water at $9, but he pays only $5 for it. Therefore he has a consumer surplus of $4 for this bottle. He values his second bottle of water at $7 but pays only $5 for it. yielding a consumer surplus of $2. Therefore. Alex's total consumer surplus is $4+$2=$6$4+$2=$6. Producer surplus is the difference between a producer's willingness to sell (what the item costs him to make} and what the seller actually receives. Clancy receives $5 for his first bottle of water, but it costs only $1 to produce. Therefore, Clancy has a producer surplus of $4 from this sale. He also receives $5 for his second bottle of water, which costs $4 to produce, so he has a producer surplus of $1 for this bottle. Clancy's total producer surplus is$4+$l=$5$4+$1=$5. Total surplus is the sum of consumer surplus and producer surplus. Therefore. total surplus is$5+ $5=$11$6+$5=$11. See Sections: Willingness to Pay; and Cost and the Willingness to Sell. If Clancy produced and Alex consumed one less bottle of water, total surplus woulcErrorl Filenarne not 5peclfied.fall Points: lfl Close Explanation