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if a consumer is willing to pay $20 for a pizza, but the price of the pizza is $10, then the consumer surplus resulting from the customer's purchase of the pizza is

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Consumer Choice And Demand

Section: Chapter Questions

Problem 3.10P

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if a consumer is willing to pay $20 for a pizza, but the price of the pizza is $10, then the consumer surplus resulting from the customer's purchase of the pizza is

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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Andi is willing to buy a shoe X for Rp. 100, Budi is willing to buy a shoe X for Rp. 90, Tono is willing to buy a shoe X for Rp. 80. it turns out that when he arrives at the shop, the price of the shoe is Rp. 70, so the total consumer surplus is Rp. 60true or false?
Janice is willing to pay $100 for the first pair of shoes, $80 for the second pair, $50 for a third, and $30 for a fourth. If shoes cost $50, Janice will buy _____ pairs of shoes and her total consumer surplus will equal _______.
Suppose a consumer is willing to buy a book for $50, but the actual price of the book in the market is $30. What is the consumer surplus in this case? If the price of the book increases to $40, what would be the new consumer surplus?
Suppose there is an early freeze in California that reduces the size of the lemon crop. As the price of lemons rises, what happens to consumer surplus in the market for lemons?
Explain the meaning of consumer surplus with the help of example.
Think about all the goods and services that you consume. Which product gives you the highest consumer surplus? Discuss in detail using the equation of consumer surplus
will a consumer buy a good if his consumer surplus is zero?
The standard measure of consumer surplus is a fair measure of the value of a good to consumers because it gives an equal weight to each individual consumer.” Is this statement true, false, or uncertain?
] It is a hot day, and Elmo is thirsty. Here is the value of Elmo places on a bottle of water:] Value of first bottle $7 Value of second bottle $5 Value of third bottle $3 Value of fourth bottle $1 From this information, derive Elmo’s demand schedule. Then graph his demand curve for bottled water. If the price of a bottle of water is $4, how many bottles does Elmo buy? How much consumer surplus does Elmo get from his purchases? Show Elmo’s consumer surplus in your graph. If the price falls to $2, how does quantity demanded change? How does Elmo’s consumer surplus change? Show these changes in your graph.
Larry purchases a book for $10, and his consumer surplus is $3. How much is Larry willing to pay for the book?
Consumer 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…
Once the buyer and seller agree on a price and exchange the product, a total surplus is "realized" as the "gains from trade." True or false?