2. Kerri goes shopping for volleyballs. The table below shows the dollar value of the total benefit she receives from buying various quantities of volleyballs. Volleyballs Total Benefit $0 1 $50 2 $95 3 $125 4 $146 5 $156 $160 7 $161 (a) Calculate the marginal benefit Kerri receives from buying the third volleyball. (b) Assume the price of each volleyball is $9. (i) Calculate Kerri's total consumer surplus if she buys two volleyballs. Show your work. (ii) How many volleyballs should Kerri buy to maximize her total consumer surplus from volleyballs? Explain using marginal analysis. (c) Assume that the market for volleyballs is perfectly competitive and that soccer balls are a substitute for volleyballs. (i) Draw a correctly labeled graph of the market for volleyballs, and label the equilibrium price as P, and the equilibrium quantity as Q,. (ii) If the price of soccer balls decreases, show the effect on the equilibrium price and quantity of volleyballs on your graph in part c(i). (d) Assume instead that a 10 percent increase in income causes the demand for volleyballs to fall by 5 percent. (i) Calculate the income elasticity of demand for volleyballs. (ii) Does the value of the income elasticity indicate that volleyballs are a normal good or an inferior good? Explain.

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