There are six potential consumers of computer games, each
willing to buy only one game. Consumer 1 is willing to pay
$40 for a computer game, consumer 2 is willing to pay $35,
consumer 3 is willing to pay $30, consumer 4 is willing pay
$25, consumer 5 is willing to pay $20, and consumer 6 is willing
to pay $15.
a. Suppose the market price is $29. What is the total consumer
surplus?
b. Now the market price decreases to $19. What is the total
consumer surplus now?
c. When the price fell from $29 to $19, how much did each
consumer’s individual consumer surplus change?
AND
On Thursday nights, a local restaurant has a pasta special. Ari
likes the restaurant’s pasta, and his willingness to pay for each
serving is shown in the accompanying table.
Quantity of Servings (pasta) - 1, 2, 3, 4, 5, 6
Willingness to pay for servings (per serving) - $10, $8, $6, $4, $2, and $0
a. If the price of a serving of pasta is $4, how many servings
will Ari buy? How much consumer surplus does he
receive?
b. The following week, Ari is back at the restaurant again,
but now the price of a serving of pasta is $6. By how
much does his consumer surplus decrease compared to
the previous week?
c. One week later, he goes to the restaurant again. He discovers
that the restaurant is offering an “all you can eat” special for $25. How much pasta will Ari eat, and how much consumer surplus does he receive now?
d. Suppose you own the restaurant and Ari is a “typical” customer.
What is the highest price you can charge for the
“all you can eat” special and still attract customers?
willing to buy only one game. Consumer 1 is willing to pay
$40 for a computer game, consumer 2 is willing to pay $35,
consumer 3 is willing to pay $30, consumer 4 is willing pay
$25, consumer 5 is willing to pay $20, and consumer 6 is willing
to pay $15.
a. Suppose the market price is $29. What is the total consumer
surplus?
b. Now the market price decreases to $19. What is the total
consumer surplus now?
c. When the price fell from $29 to $19, how much did each
consumer’s individual consumer surplus change?
AND
On Thursday nights, a local restaurant has a pasta special. Ari
likes the restaurant’s pasta, and his willingness to pay for each
serving is shown in the accompanying table.
Quantity of Servings (pasta) - 1, 2, 3, 4, 5, 6
Willingness to pay for servings (per serving) - $10, $8, $6, $4, $2, and $0
a. If the price of a serving of pasta is $4, how many servings
will Ari buy? How much consumer surplus does he
receive?
b. The following week, Ari is back at the restaurant again,
but now the price of a serving of pasta is $6. By how
much does his consumer surplus decrease compared to
the previous week?
c. One week later, he goes to the restaurant again. He discovers
that the restaurant is offering an “all you can eat” special for $25. How much pasta will Ari eat, and how much consumer surplus does he receive now?
d. Suppose you own the restaurant and Ari is a “typical” customer.
What is the highest price you can charge for the
“all you can eat” special and still attract customers?