Question

NEED HELP WITH THIS ASAP !!!! PLEASEEEEE

$700 $600 $500 $400 $300 $200 $100 D, $Value 0 10 20 30 40 50 60 70 80 90Qd Use Demand graph above to answer Qns. 1 -4. Assume the $Price for Puppies is$200 1. What is the buyer's optimal (best) quantity demanded, Qd? 2. What Area shows buyer's net gain or 'Consumer Surplus'? 3. What Area shows buyer's Total Dollar Value (Total Willingness to Pay)? 4. What Area shows buyer's Total Expenditures (spending on good)? 5. Number example of Consumer Surplus: Lara wants to buy a new Surf board. She is willing to spend $650 maximum. The Price of one she wants to buy is $530. What is her Consumer Surplus or net gain measured in dollars when she buys it?

Answer 1

1) 80 units

2) C.S = 1/2 x base x height = 1/2 x 80 x (700 - 200) = 40 x 500 = 20,000

3) Blue dotted area shows buyer's total dollar value.

4) Red dotted area shows buyer's total expenditure.

5. Consumer surplus = Price consumer is willing to pay - Actual price of good = 650 - 530 = $ 120