Question

Read and consider the “Willingness to Pay” example in Section 7-1 (Chapter 7 Section 1).

Now find and evaluate the willingness to pay, consumer surplus, demand, producer surplus, cost and willingness to sell of your own example. (products to consider: online ticket sales to sporting events, Vegas shows, eBay products, etc).

The textbook for this class is IAC MT PRINCIPLES MACROECONOMICS, 8th Edition

Answer 1

willingness to pay- maximum price a consumer is ready to pay to buy a certain product

willingness to sell- the minimum price at which the producer is ready to accept to sell its product

consumer surplus- its the difference between the actual price of the product and the amount a consumer is ready to pay for that product.

producer surplus- its the difference between the actual price he gets for his product and the price at which he was ready to sell its product at.

demand- the willingness and ability to purchase a commodity at a time period

cost- the amount of money needed to produce something.

for example an ebay product, say a shirt. it costs around 6$ to produce it and the prosucer by keeping some margine of profit willing to sell it at 11$. the market demand for the product is enough that the product will be sold out at $13. the consumer by seeing the product was ready to pay 15$ for it. after knowing the price of it the consumer found out that the actual price is less than what he was ready to pay so here the consumer surplus is 2$(15$-13$). the producer surplus here is 2$(13$-11$). so here in this case at price 13$ both consumer and producer are in surplus and the market is being cleared.