3. It is a hot day, and Nina is thirsty. Here is the value, in money terms, she places on a bottle of lemonade: Value of first bottle £7 Value of second bottle £5 Value of third bottle £3 Value of fourth bottle £1 (i) From this information, derive Nina’s demand schedule. Graph her demand curve for bottled lemonade. (ii) If the price of a bottle of lemonade is £4, how many bottles does Nina buy? How much consumer surplus does Nina get from her purchases? Show Nina’s consumer surplus on your graph. (iii) If the price falls to £2, how does quantity demanded change? How does Nina’s consumer surplus change? Show these changes on your graph.

3. It is a hot day, and Nina is thirsty. Here is the value, in money terms, she places on a bottle of lemonade: Value of first bottle £7 Value of second bottle £5 Value of third bottle £3 Value of fourth bottle £1 (i) From this information, derive Nina’s demand schedule. Graph her demand curve for bottled lemonade. (ii) If the price of a bottle of lemonade is £4, how many bottles does Nina buy? How much consumer surplus does Nina get from her purchases? Show Nina’s consumer surplus on your graph. (iii) If the price falls to £2, how does quantity demanded change? How does Nina’s consumer surplus change? Show these changes on your graph.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.2P

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