The table presents the quantities demanded of musicdownloads per day for two consumers. Use the information inthe table to place the points in the graph to create themarginal social benefit (MSB) curve. Then calculateconsumer and producer surplus. The market price of musicdownloads is $1 which is also equal to the marginal socialcost.PriceJim's quantity865Market for Music DownloadsDeb's quantity($)demandeddemanded7Price ($)40036205312442Market Price = MSC1353MSB026401 2 3456 7 8 9Quantity10 11 12 13 14 15175086IncorrectConsumer surplus: $12.5Incorrect10.5Producer surplus: $Incorrect

Answered: Image /qna-images/answer/5d4a5fa6-bb82-4243-a2ab-8bc9916cf8a8.jpg

Answered: The table presents the quantities…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Consumer Choice Theory

Section: Chapter Questions

Problem 5SQP

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Dan consumes two goods: peanut butter andjelly sandwiches, which are an inferior good, andchicken salad sandwiches, which are a normalgood. He gets a raise at work. Will the ratio ofpeanut butter and jelly sandwiches to chickensalad sandwiches that he consumes increase ordecrease?
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The Law of Demand and Marginal Utility Daniel allocates hisbudget of $24 per week among three goods. Use the followingtable of marginal utilities for good A, good B, and good C toanswer the questions:QA MUA QB MUB QC MUC1 50 1 75 1 252 40 2 60 2 203 30 3 40 3 154 20 4 30 4 105 15 5 20 5 7.5a. If the price of A is $2, the price of B is $3, and the priceof C is $1, how much of each does Daniel purchase inequilibrium?b. If the price of A rises to $4 while other prices and Daniel’sbudget remain unchanged, how much of each does he purchasein equilibrium?c. Using the information from parts (a) and (b), draw the demandcurve for good A. Be sure to indicate the price andquantity demanded for each point on the curve.15. Consumer Surplus Suppose the linear demand curve for shirtsslopes downward and that consumers buy 500 shirts per yearwhen the price is $30 and 1,000 shirts per year when the priceis $25.a. Compared to the prices of $30 and $25, what can you sayabout the marginal valuation that…
Solve parts d,e and f Jen from Thunder Bay consumes housing (H) and food (F). Her studentstipend is $600/month. She has a utility function of U(H, F) = F1/3H2/3.The initial price of food is pF = 1 and the price of housing is pH = 10. (a) Determine how much food and housing she consumes.(b) Suppose the government decides to subsidize her housing by 50%.This has the effect of lowering the price she actually pays for housingto $5. If the price of food is $1 and the price of housing is $5, calculateJen’s utility maximizing bundle of goods.(c) How much does the Government spend on this program (just on Jen)?(d) Calculate her utility level using the utility function above and thequantities consumed.(e) Calculate Jen’s utility maximizing bundle and her resulting utilitylevel if the government chooses to simply give her the money theywould have spent on the program (rather than subsidize housing).How much utility does Jen get?(f) Given the two programs cost the same, which one is better for…
Suppose a consumer has income of $20 and faces a price of good x of 50 cents. When the consumer maximizes utility between x and expenditures on AOG (E), he is on the following indifference curve: E= 312.5 / x+10 When the price of falls to 40 cents he moves to the following indifference curve: E = 360 / x+10 Use information about these indifference curves to derive 2 different measures of the change in consumer surplus from the price change. Explain what you have measured and show your work.
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