1. Assume that Hurricane Dorian destroyed thousands of crawfish traps. Explain and illustrate what would happen to the consumer surplus of crawfish consumers.
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- You are considering shoplifting a head of broccoli from the farmer’s market in SLO. Your buyer value for the broccoli is $1.75. The broccoli is available for legal purchase for $1.50. For comparison purposes, assume that if you don’t steal the broccoli, you will make the choice that makes you best off within the law. Which statement below is correct? Group of answer choices: -Stealing the broccoli leads to an increase in total surplus but also causes a reduction in surplus for owners of the broccoli. -Stealing the broccoli leads to a decrease in total surplus and also cause a reduction in surplus for owners of the broccoli. -Stealing the broccoli leads to an increase in total surplus and does not harm anyone else. -Stealing the broccoli does not lead to an increase or decrease in total surplus and also causes a reduction in surplus for owners of the broccoli.1. Suppose that there were 25 people who had a reservation price of $500, and the 26th person had a reservation price of $200. What would the demand curve look like? 2. In the above example, what would the equilibrium price be if there were 24 apartments to rent? What if there were 26 apartments to rent? What if there were 25 apartments to rent? 3. If people have difffferent reservation prices, why does the market demand curve slope down? 4. In the text we assumed that the condominium purchasers came from the inner-ring people—people who were already renting apartments. What would happen to the price of inner-ring apartments if all of the condominium purchasers were outer-ring people—the people who were not currently renting apartments in the inner ring?Suppose there are 100 consumers with identical individual demand curves. When the price ofa movie ticket is $8, the quantity demanded for each person is 5. When the price is $4, thequantity demanded for each person is 9. Assuming the law of demand holds, which of thefollowing choices is the most likely quantity demanded in the market when the price is $6? Group of answer choices 700 1,000 1,200 400
- Suppose a consumer has income of $20 and faces a price of good x of 50 cents. When the consumer maximizes utility between x and expenditures on AOG (E), he is on the following indifference curve: E= 312.5 / x+10 When the price of falls to 40 cents he moves to the following indifference curve: E = 360 / x+10 Use information about these indifference curves to derive 2 different measures of the change in consumer surplus from the price change. Explain what you have measured and show your work.Assume the price of a particular paint brush is $3.50. Denise purchases the paint brush for $3.50 but was wiling to pay $5.00. Ted purchases the paint brush for $3.50 but was willing to pay $4.00. What is the total consumer surplus for Denise and Ted? Group of answer choices $2.00 $4.00 $5.00 $3.55 $1.50Consumer surplus is calculated by taking the difference of the price consumers are willing to pay and the price actually paid. When the price is $4, the consumer would buy only two bottles because the value the consumer would get from the first bottle is $7. This implies, the surplus is $3. Similarly for the second bottle, the value the consumer would get from consuming it is $5 where the price the consumer will pay is $4, this implies the surplus is $1. Lastly, for the third bottle the value is $3 and the price is $4 so the price surpasses the value, therefore the consumer will not consumer beyond two bottles. The consumer surplus could be calculated as: Consumer Surplus = (7-4) + (5-4) = 3 + 1 = 2 This means the consumer will buy two bottles. If the price falls to $2, the consumer would only buy three bottles because the value the consumer gets from the first bottle valued at $7 versus the $2 paid implies a consumer…
- 2. Individual demand and consumer surplus Consider the market for electric vehicles. The market price of each electric vehicle is $280,000, and each consumer demands no more than one electric vehicle. Suppose that Manuel is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $490,000. Based on Manuel's willingness to pay, the following graph shows his demand curve for electric vehicles. Shade the area representing Manuel's consumer surplus using the green rectangle (triangle symbols). Manuel’s Consumer Surplus012345560490420350280210140700PRICE (Thousands of dollars)QUANTITY (Electric vehicles)Manuel’s DemandMarket Price Now, suppose another buyer, Poornima, enters the market for electric vehicles, and her willingness to pay is $420,000. Based on Poornima's and Manuel's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Manuel's…Suppose that a consumer perceives X and AOG (all other goods) to be perfect (one-for-one) substitutes. The consumer has an income of $100 and the price of x is 80 cents. If the price of x rises to 1.20, what is the resulting change in consumer surplus? Show work and explain1. An individual is confronted with three commodities x, y and z. Suppose the consumer’s money income is Birr 39 and the marginal utility of each good is independent of the amount consumed of other goods. Using the hypothetical data given below, find the optimum quantities of a consumer. Unit of each good 1 2 3 4 5 6 7 8 9 10 Mux 12 11 10 9 8 7 3 0 -2 -6 MUy 60 55 48 40 27 21 19 18 9 0 MUz 70 60 50 45 30 25 18 10 0 -5 a) If the three goods were “free” or no budget constraint. b) If respective prices are Px= 1 Birr, Py=3 Birr and Pz=5 Birr
- Figure 7-1 Refer to Figure 7-1. If the price of the good is $50, then consumer surplus amounts to Group of answer choices $400. $500. $600. $750.There are only two brands of tennis balls Tom purchases: "Wilson" and "Penn." The more he purchases of a ball, the lower the marginal utility of that ball. He spends all of his income and his marginal utility of a "Wilson" is 6 and his marginal utility of an "Penn" is 12. The price of a "Wilson" ball is $1 and the price of an "Penn" is $2. Which of the statements is true based on the above information? Question 19 options: a) Tom could increase his satisfaction by trading "Wilson" for "Penn." b) In equilibrium, Tom must give up three "Penn" balls for two "Wilson" balls. c) Tom can increase his satisfaction by doing nothing d) Tom would be willing to give up two "Penn" balls for one "Wilson" ball.3. Suppose John buys only two goods. His preferences satisfy all standard axioms. Price of good 1 is £2 per unit. Good 2 is priced as follows. There is free provision of the first 3 units. Then, there is a discount of 25% for each additional unit if a consumer buys no more than 6 units. After 6 units a consumer has to pay the full price of £8. The following is true: a)/ If John’s income is £37 and if he wants to consume at least 7 units of good 2 then he can’t afford more than 3 units of good 1. b)/ If John’s income is above £30, and if he consumes 5 units of good 2 at his optimal consumption point, then the MRS at this point must be -1/4. c)/ If John’s income is M, where M is greater than 36, then he can’t afford more than ?+12 8 units of good 2. d)/ If John’s budget is above £45 and if he buys 5 units of good 1, then he can afford at least 8 units of good 2. e)/ None of the above.