Question

Homework (Ch 07) 3. Consumer surplus for a group of consumers The following graph shows the demand curve for a group of consumers in the U.S. market (blue line) for tablets. The market price of a tablet is by the black horizontal line at $90. Each rectangle you can place on the following graph corresponds to a particular buyer in this market: orange (square symbols) for Andrew, gree (triangle symbols) for Beth, purple (diamond symbols) for Darnell, tan (dash symbols) for Eleanor, and blue (circle symbols) for Jacques. Use ti rectangles to shade the areas representing consumer surplus for each person who is willing and able to purchase a tablet at a market price of $ (Note: If a person will not purchase a tablet at the market price, indicate this by leaving his or her rectangle in its original position on the pale Andrew Andrew Beth Beth Market Price PRICE (Dollars per tablet) Damel Eleanor Jacques

Answer 1

Solution: Consumer surplus is the difference between what the consumer is willing to pay and what she actually pays.

In scenario 1, a total of three consumers Andrew, Beth and Damell are willing to buy the tablet

Total consumer surplus = (140-90)+(120-90)+(110-90) = $100

In scenario 2, a total of five consumers Andrew, Beth, Damell and Eleanor are willing to buy the tablet. Thus the number increases to four consumers and Total consumer surplus = (140-50)+(120-50)+(110-50) +(70-50) = $240.