Question

1. Below is the marginal willingness to pay of a consumer for organic apples. 2.00 1.20 1.00 0.80 0.50 0.30 What is the individual's total willingness to pay at a consumption level of 4 apples? a. 2. The market demand for a commodity is made up by two consumers, Ants and Birgit. Their individual demand schedules are depicted in the table. Fill in the empty column and draw the demand schedule. Price Quantity demanded Quantity demanded Market demand in euro by Ants 20 25 30 40 by Birgit 18 15 12 3. Ants is willing to pay 400 for a new suit, but he gets an offer to buy the suit for 350. His consumer surplus is 50. 150. c. 350 d. 400. Qc 4. Suppose Linda, Lauri and Lia all purchase bulletin boards for their rooms for 15 each. Lindas willingness to pay was 35, Lauri's willingness to pay was 25, and Lia's willingness to pay was 30. Total consumer surplus for these three would be a. 15 b. 30. c. 45. d. 90.

Answer 1

Below is the marginal willingness to pay consumer consumption level marginal willingness to pay Total willingness to pay Individual total willingness to pay at consumption level of 4 apples will be [5] Total willingness to pay = e marginal willingness to pay At 4 apples it will be = 2.00 + 1.20 + 1.00 + 0.80 5.0 calculating market demand schedule market demand schedule 5 the horizontal addiction of all individual demand schedules exist in the market Ants in willingness to pay E 400 for a new site, but he gets an offer to buy it for E 350 His consumer surplus will be (a) E 50 cs = willingness to pay - what he actually pay = E 400 - E 350 = E 50 Ans = (a) E 50 total cs = 20 + 10 + 15 = 45 Ans (c) E 45