True or false: keeping his maximum willingness to pay for a yacht in mind, Tim will buy the yacht because it will be worth more to him than its market price of $350,000 2. Individual demand and consumer surplusConsider the market for yachts. The market price of each yacht is $350,000, and each buyer demands no more than one yacht.Suppose that Nick is the only consumer in the yacht market. His willingness to pay for a yacht is $560,000. Based on Nick's willingness to pay, thefollowing graph shows his demand curve for yachts.Shade the area representing Nick's consumer surplus using the green rectangle (triangle symbols).Nick's Demand560490Nick's Consumer Surplus420Market Price350280210140704QUANTITY (Yachts)PRICE (Thousands of dollars) Now, suppose another buyer, Rosa, enters the market for yachts, and her willingness to pay is $490,000.Based on Rosa's and Nick's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol).Next, shade Nick's consumer surplus using the green rectangle (triangle symbols), and shade Rosa'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.560490Demand Curve420Market Price350Nick's Consumer Surplus280210Rosa's Consumer Surplus1407034.QUANTITY (Yachts)PRICE (Thousands of dollars)

Given:Market price=$350,000Willingness to pay=$560,000Quantity=1Now,Consumer surplus=12(Willingness…

Answered: True or false: keeping his maximum…

True or false: keeping his maximum willingness to pay for a yacht in mind, Tim will buy the yacht because it will be worth more to him than its market price of $350,000

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Consumers, Producers, And The Efficiency Of Markets

Section: Chapter Questions

Problem 1PA

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Question

True or false: keeping his maximum willingness to pay for a yacht in mind, Tim will buy the yacht because it will be worth more to him than its market price of $350,000

2. Individual demand and consumer surplus
Consider the market for yachts. The market price of each yacht is $350,000, and each buyer demands no more than one yacht.
Suppose that Nick is the only consumer in the yacht market. His willingness to pay for a yacht is $560,000. Based on Nick's willingness to pay, the
following graph shows his demand curve for yachts.
Shade the area representing Nick's consumer surplus using the green rectangle (triangle symbols).
Nick's Demand
560
490
Nick's Consumer Surplus
420
Market Price
350
280
210
140
70
4
QUANTITY (Yachts)
PRICE (Thousands of dollars)

Now, suppose another buyer, Rosa, enters the market for yachts, and her willingness to pay is $490,000.
Based on Rosa's and Nick's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol).
Next, shade Nick's consumer surplus using the green rectangle (triangle symbols), and shade Rosa'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.
560
490
Demand Curve
420
Market Price
350
Nick's Consumer Surplus
280
210
Rosa's Consumer Surplus
140
70
3
4.
QUANTITY (Yachts)
PRICE (Thousands of dollars)

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