4. On Thursday nights, Hacienda Pizza Co. has a pasta special. Jacob likes the restaurant’s pasta, and his willingness to pay for each serving is shown in the accompanying table: Willingness to pay for pasta (per serving) $10 Quantity of Pasta (servings) 1 2 $8 3 $6 4 $4 5 $2 $0 a. If the price of a serving of pasta is $5, how many servings will Jacob buy? How much consumer surplus does he receive? b. The following week, Jacob is back, but now the price of a serving is $6. By how much does his consumer decrease compared to the first week? c. One week later, he goes to the restaurant again. He discovers that the restaurant is offering an "all you can eať" special for $25. How much pasta will Jacob eat, and how much consumer surplus does he receive now? d. Suppose you own Hacienda Pizza Co and Jacob is a “typical" customer. What is the highest price you can charge for the “all you can eať" special and still attract customers?
4. On Thursday nights, Hacienda Pizza Co. has a pasta special. Jacob likes the restaurant’s pasta, and his willingness to pay for each serving is shown in the accompanying table: Willingness to pay for pasta (per serving) $10 Quantity of Pasta (servings) 1 2 $8 3 $6 4 $4 5 $2 $0 a. If the price of a serving of pasta is $5, how many servings will Jacob buy? How much consumer surplus does he receive? b. The following week, Jacob is back, but now the price of a serving is $6. By how much does his consumer decrease compared to the first week? c. One week later, he goes to the restaurant again. He discovers that the restaurant is offering an "all you can eať" special for $25. How much pasta will Jacob eat, and how much consumer surplus does he receive now? d. Suppose you own Hacienda Pizza Co and Jacob is a “typical" customer. What is the highest price you can charge for the “all you can eať" special and still attract customers?
Chapter4: Utility Maximization And Choice
Section: Chapter Questions
Problem 4.1P
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