Question

The table gives the demand schedules for train travel for Ann, Beth, and Cy. What is each traveller's consumer surplus when the price is $4 a kilometre? Price (dollars per kilometre) Quantity demanded (kilometres) Ann Beth What is the market consumer surplus when the price is $4 a kilometre? >>> Answer to 2 decimal places. When the price is $4 a kilometre, Ann's consumer surplus is $1. LOOOO When the price is $4 a kilometre, Beth's consumer surplus is $N. When the price is $4 a kilometre, Cy's consumer surplus is When the price is $4 a kilometre, the market consumer surplus is $

Answer 1

Consumer surplus is the area below demand curve and above market price. It is the difference between what consumers are willing to pay and what they actually pay.

Area of triangle= ½ ( base x height)

Ann's consumer surplus:

When price is $4 per kilometer, quantity demanded is 25 kilometers

1/2 (25-0) * ($9-$4)=1/2 x (25 x 5)= 1/2 x 125=$62.50.

Beth's consumer surplus:

When price is $4 per kilometer, quantity demanded is 20 kilometers

1/2 (20-0) * ($8-$4)=1/2 x (20 x 4)= 1/2 x 80=$40.00.

Cy's consumer surplus:

When price is $4 per kilometer, quantity demanded is 15 kilometers

1/2 (15-0) * ($7-$4)=1/2 x (15 x 3)= 1/2 x 45=$22.50.

Market surplus is the consumer surplus of Ann, Beth and Cy.

Market surplus= $62.50 + $40.00 = $22.50= $125.00.