# Individual Demand and Consumer SurplusConsider the market for hyperbaric chambers. The market price of each hyperbaric chamber is $135,000, and each consumer demands no more than one hyperbaric chamber.Suppose that Clancy is the only consumer in the hyperbaric chamber market. Their willingness to pay for a hyperbaric chamber is $270,000. Based on Clancy's willingness to pay, the following graph shows his demand curve for hyperbaric chambers.### Graph Explanation- **Axes**: - The **vertical axis** represents the price in thousands of dollars. - The **horizontal axis** represents the quantity of hyperbaric chambers.- **Lines and Labels**: - The **blue line** labeled "Clancy's Demand" shows Clancy's willingness to pay $270,000 for one hyperbaric chamber. - The **horizontal black line** labeled "Market Price" indicates the market price of $135,000.### Consumer Surplus- **Consumer Surplus Area**: - Represented by a **green rectangle** on the graph. This indicates the difference between what Clancy is willing to pay ($270,000) and the market price ($135,000), which is the consumer surplus. - Consumer surplus is the extra value or utility that consumers receive when they pay less for a product than they are willing to pay.To find the consumer surplus, calculate the area of the rectangle between the demand line and the market price line at the quantity demanded (1 hyperbaric chamber). Now, suppose another buyer, Eileen, enters the market for hyperbaric chambers, and her willingness to pay is $180,000.Based on Eileen's and Clancy’s respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Clancy’s consumer surplus using the green rectangle (triangle symbol), and shade Eileen’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.**Graph Description:**- X-axis: Quantity (Hyperbaric chambers)- Y-axis: Price (Thousands of dollars)**Elements:**- **Demand Curve**: Illustrated with blue points (circle symbol).- **Market Price**: Indicated as a horizontal line at a set price level.- **Clancy’s Consumer Surplus**: Represented by a green rectangle (triangle symbol) above the market price line.- **Eileen’s Consumer Surplus**: Represented by a purple rectangle (diamond symbols) above the market price line.Suppose Hubert is willing to pay a total of $90,000 for a hyperbaric chamber.True or false: Keeping his maximum willingness to pay for a hyperbaric chamber in mind, Hubert will buy the hyperbaric chamber because it would be worth more to him than its market price of $135,000.- [ ] True- [x] False

Consumer surplus is the difference between the price a buyer is willing to pay and the price they…

2. Individual demand and consumer surplus Consider the market for hyperbaric chambers. The market price of each hyperbaric chamber is $135,000, and each consumer demands no more than one hyperbanc chamber. Suppose that Clancy is the only consumer in the hyperbaric chamber market. Their willingness to pay for a hyperbaric chamber is $270,000. Based on Clancy's willingness to pay the following graph shows his demand curve for hyperbaric chambers. Shade the area representing Clancy's consumer surplus using the green rectangle (triangle symbol). PRICE (Thousands of dol 300 315 270 100 155 00 45 Clancy's Demand Market Price QUANTITY (Hyperbanc chambers) Clancy's Consumer Surplus

2. Individual demand and consumer surplus Consider the market for hyperbaric chambers. The market price of each hyperbaric chamber is $135,000, and each consumer demands no more than one hyperbanc chamber. Suppose that Clancy is the only consumer in the hyperbaric chamber market. Their willingness to pay for a hyperbaric chamber is $270,000. Based on Clancy's willingness to pay the following graph shows his demand curve for hyperbaric chambers. Shade the area representing Clancy's consumer surplus using the green rectangle (triangle symbol). PRICE (Thousands of dol 300 315 270 100 155 00 45 Clancy's Demand Market Price QUANTITY (Hyperbanc chambers) Clancy's Consumer Surplus

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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