Suppose Kenji is willing to pay a total of $180,000 for an antique car.True or False: Keeping his maximum willingness to pay for an antique car in mind, Kenji will buy the antique car because it would be worth more to him than its market price of $225,000. True False 2. Individual demand and consumer surplusConsider the market for antique cars. The market price of each antique car is $225,000, and each buyer demands no more than one antique car.Suppose that Eric is the only consumer in the antique car market. His willingness to pay for an antique car is $360,000. Based on Eric's willingness topay, the following graph shows his demand curve for antique cars.Shade the area representing Eric's consumer surplus using the green rectangle (triangle symbols).Eric's Demand360315Eric's Consumer Surplus270Market Price2251801359045PRICE (Thousands of dollars) Now, suppose another buyer, Ginny, enters the market for antique cars, and her willingness to pay is $315,000.Based on Ginny's and Eric's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol).Next, shade Eric's consumer surplus using the green rectangle (triangle symbols), and shade Ginny's consumer surplus using the purple rectangle(diamond symbols).Note: Plot your points as a step function in the order in which you would like them connected. Line segments will connect the points automatically.360315Demand Curve270Market Price225Eric's Consumer Surplus180135Ginny's Consumer Surplus904512345PRICE (Thousands of dollars)

Consumer surplus is the difference between what consumer is willing to pay for all the units…

Suppose Kenji is willing to pay a total of $180,000 for an antique car. True or False: Keeping his maximum willingness to pay for an antique car in mind, Kenji will buy the antique car because it would be worth more to him than its market price of $225,000

Suppose Kenji is willing to pay a total of $180,000 for an antique car. True or False: Keeping his maximum willingness to pay for an antique car in mind, Kenji will buy the antique car because it would be worth more to him than its market price of $225,000

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 2P

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Question

Suppose Kenji is willing to pay a total of $180,000 for an antique car.

True or False: Keeping his maximum willingness to pay for an antique car in mind, Kenji will buy the antique car because it would be worth more to him than its market price of $225,000.

True

False

2. Individual demand and consumer surplus
Consider the market for antique cars. The market price of each antique car is $225,000, and each buyer demands no more than one antique car.
Suppose that Eric is the only consumer in the antique car market. His willingness to pay for an antique car is $360,000. Based on Eric's willingness to
pay, the following graph shows his demand curve for antique cars.
Shade the area representing Eric's consumer surplus using the green rectangle (triangle symbols).
Eric's Demand
360
315
Eric's Consumer Surplus
270
Market Price
225
180
135
90
45
PRICE (Thousands of dollars)

Now, suppose another buyer, Ginny, enters the market for antique cars, and her willingness to pay is $315,000.
Based on Ginny's and Eric's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol).
Next, shade Eric's consumer surplus using the green rectangle (triangle symbols), and shade Ginny's consumer surplus using the purple rectangle
(diamond symbols).
Note: Plot your points as a step function in the order in which you would like them connected. Line segments will connect the points automatically.
360
315
Demand Curve
270
Market Price
225
Eric's Consumer Surplus
180
135
Ginny's Consumer Surplus
90
45
1
2
3
4
5
PRICE (Thousands of dollars)

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