Question

The following graph shows the demand curve for a group of consumers in the U.S. market (blue line) for smartphones. The market price of a smartphone is shown by the black horizontal line at $150 Each rectangle you can place on the following graph corresponds to a particular buyer in this market: orange (square symbols) for Clancy, green (triangle symbols) for Eileen, purple (diamond symbols) for Hubert, tan (dash symbols) for Kate, and blue (circle symbols) for Manuel. Use the rectangles to shade the areas representing consumer surplus for each person who is willing and able to purchase a smartphone at a market price of $150. (Note: If a person will not purchase a smartphone at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) 400 Clancy 350 Clancy Eileen a 300 250 Eileen Hubert a 200 Market Price Hubert a 150 Kate C 100 Kate Manuel Manuel QUANTITY (Smartphones) Based on the information on the previous graph, you can tell that consumer surplus in this market will be S will buy smartphones at the given market price, and total Suppose the market price of a smartphone increases to $250

Answer 1

400 Jacques Jacques Kyoko 300 250 t 200 Kyoko Musashi Market Price Musashi 150 Rina 100 t Sean Rina Sean

Jacques, Kyoko and Musashi will buy the smartphone.

Total consumer surplus = (350 - 150) x 1 + (300 - 150) (2-1) + (200 - 150)(3 -2)

                                            = 200 + 300 + 50 = 550

400 т Jacques 350 Jacques 300 Kyoko Market Price 250 Kyoko Musashi a 200 150 Musashi Rina 100 Sean Rina 50 Sean QUANTITY (Smartphones)

Number of buyers decreases to 2.

Total consumer surplus decreases to $ 150.

C.S = (350 - 250)1 + (300 - 250)1 = 100 + 50 = $ 150