A car hire company has 110 cars available for hire, which are fully booked out for the next 4 days. All cars available for hire are considered to be of similar quality (e.g. in terms of size, features, fuel consumption, etc.), so each car was hired for $120 per car per day. (Furthermore, assume for the purpose of this question that hire cars are non-transferrable, which means that customers with hire cars are unable to sell their booking for a higher price to someone who missed out on securing a hire car). The maximum a consumer was willing to pay to hire a car was $225 per car per day (where total cars hired would = 0 if the price of hiring a car was any higher). Assuming a linear demand curve, what was the consumer surplus from one day only? Answer to the nearest whole number in dollars (i.e. with no decimal places).

A car hire company has 110 cars available for hire, which are fully booked out for the next 4 days. All cars available for hire are considered to be of similar quality (e.g. in terms of size, features, fuel consumption, etc.), so each car was hired for $120 per car per day. (Furthermore, assume for the purpose of this question that hire cars are non-transferrable, which means that customers with hire cars are unable to sell their booking for a higher price to someone who missed out on securing a hire car). The maximum a consumer was willing to pay to hire a car was $225 per car per day (where total cars hired would = 0 if the price of hiring a car was any higher). Assuming a linear demand curve, what was the consumer surplus from one day only? Answer to the nearest whole number in dollars (i.e. with no decimal places).

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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