2. Individual demand and consumer surplusConsider the market for antique cars. The market price of each antique car is $180,000, and each buyer demands no more than one antique car.Suppose that Jake is the only consumer in the antique car market. His willingness to pay for an antique car is $315,000. Based on Jake's willingness to pay, the following graph shows his demand curve for antique cars.Shade the area representing Jake's consumer surplus using the green rectangle (triangle symbols). Shade the area representing Jake's consumer surplus using the green rectangle (triangle symbols).360Jake's Demand315Jake's Consumer Surplus270225Market Price1801359045123QUANTITY (Antique cars)Now, suppose another buyer, Latasha, enters the market for antique cars, and her willingness to pay is $225,000.Based on Latasha's and Jake's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circlesymbol). Next, shade Jake's consumer surplus using the green rectangle (triangle symbols), and shade Latasha's consumer surplus using the purplerectangle (diamond symbols).PRICE (Thousands of dollars) 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 Curve270225Jake's Consumer SurplusMarket Price180Latasha's Consumer Surplus13590453QUANTITY (Antique cars)Suppose Nick is willing to pay a total of $135,000 for an antique car.True or False: Keeping his maximum willingness to pay for an antique car in mind, Nick will not buy the antique car because it would be worth less tohim than its market price of $180,000.O TrueO FalsePRICE (Thousands of dollars)

Meaning of Consumer Surplus: The term consumer surplus refers to the situation under which the…

Answered: 2. Individual demand and consumer…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Individual demand and consumer surplus

Consider the market for antique cars. The market price of each antique car is $180,000, and each buyer demands no more than one antique car.

Suppose that Jake is the only consumer in the antique car market. His willingness to pay for an antique car is $315,000. Based on Jake's willingness to pay, the following graph shows his demand curve for antique cars.

Shade the area representing Jake's consumer surplus using the green rectangle (triangle 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
225
Jake's Consumer Surplus
Market Price
180
Latasha's Consumer Surplus
135
90
45
3
QUANTITY (Antique cars)
Suppose Nick is willing to pay a total of $135,000 for an antique car.
True or False: Keeping his maximum willingness to pay for an antique car in mind, Nick will not buy the antique car because it would be worth less to
him than its market price of $180,000.
O True
O False
PRICE (Thousands of dollars)

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