Please help me answer these two posts:

Post 1

Hello Everyone,

The original price was put at $200, the Tailor was ready to sell the RTW for $100 for me.

On getting to the store, the "official" price has dropped to $150. This is an obvious price difference of ($200-$150=$50). The $50 is the surplus in the pricing. It shows that the tailor would still be making, a decent amount of profit either way from the sales. Overhead costing has been adequately taken care of. Both the Tailor selling the RTW and I the purchaser are within the breakeven/profit margin. Even if I chose to haggle to a price drop of $90-$80, as a bargain hunter that I am. It is then left to the Tailor to decide, if I would be "eating" into her breakeven/profit or not.

I grew up around bargain hunting and haggling for best pricing. I know modern day "Sales" is really not sales, because sellers have made adequate profit from store prices. I still go for them at every opportunity they arise. Reason, I get the mental satisfaction of paying a price lower, than the "Original" price. I recently bought two fabrics from two Instagram vendors over in Nigeria. The two fabrics were originally sold at between 75,000 - 100,000 Naira ($96.99 - $130,21) each. The sales price were put at 50,000 Naira ($65.10). It felt good buying both for the original price of 1. They both obviously had their surplus amount, factored into the amount they sold each fabric for. Even if they did not make a profit, from selling the last few pieces to me. They would have made their cost price, You only need to grow up around or interact with traders/merchants, to understand their way of doing business. Loss is never an option, no matter how low the profit margin is.

Reference

Krugman, P., & Wells, R. (2020). Microeconomics (6th ed.). Macmillan Higher Education.

https://purdueuniversityglobal.vitalsource.com/books/

Post 2

1. In this scenario there is a consumer surplus of $50 because the consumer is willing to pay $200 and only has to pay $150 for the dress. The consumer saves $50, creating an individual consumer surplus. According to Krugman and Wells (2021), an individual consumer surplus is "the net gain that a buyer achieves from the purchase of a good" (p. 105). If the price of the dresses were to fall to $100, the buyer would have a surplus of $100 which would be enough to purchase another dress. This could influence the consumer to make a decision to purchase two dresses instead of only one dress. So surplus, definitely affects the buying decisions. There is also a producer surplus of $50 because the seller is willing to sell the dress for $100 but is able to sell for $150. The seller makes an additional $50, creating an individual producer surplus. If the price of the dresses were to fall to $100, the seller would no longer have a surplus as they would only be getting the price they were willing to sell for. This could affect their decision to manufacture dresses.
2. Recently, I purchased some yarn for a crochet project. I was willing to pay $5 per skein; however, I found it on sale and only paid $2.79 per skein. I had an individual consumer surplus of $2.21 per skein of yarn. I purchased 14 skeins so my total consumer surplus was $30.94 ($2.21 * 14).

Reference

Krugman, P. & Wells, R. (2021). Microeconomics (6th ed.). Macmillan Learning.

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