Assume the price of a particular paint brush is $3.50. Denise purchases the paint brush for $3.50 but was wiling to pay $5.00. Ted purchases the paint brush for $3.50 but was willing to pay $4.00. What is the total consumer surplus for Denise and Ted? Group of answer choices $2.00 $4.00 $5.00 $3.55 $1.50
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Assume the price of a particular paint brush is $3.50. Denise purchases the paint brush for $3.50 but was wiling to pay $5.00. Ted purchases the paint brush for $3.50 but was willing to pay $4.00. What is the total
Group of answer choices
$2.00
$4.00
$5.00
$3.55
$1.50
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- Consumer surplus is calculated by taking the difference of the price consumers are willing to pay and the price actually paid. When the price is $4, the consumer would buy only two bottles because the value the consumer would get from the first bottle is $7. This implies, the surplus is $3. Similarly for the second bottle, the value the consumer would get from consuming it is $5 where the price the consumer will pay is $4, this implies the surplus is $1. Lastly, for the third bottle the value is $3 and the price is $4 so the price surpasses the value, therefore the consumer will not consumer beyond two bottles. The consumer surplus could be calculated as: Consumer Surplus = (7-4) + (5-4) = 3 + 1 = 2 This means the consumer will buy two bottles. If the price falls to $2, the consumer would only buy three bottles because the value the consumer gets from the first bottle valued at $7 versus the $2 paid implies a consumer…Jane is interested in buying a car from a used car dealer Her maximum willingness to pay for the car is $12 (thousand). Bo, the dealer, is willing to sell the car as long as he receives at least $6 (thousand). Thus, there is a potential surplus or gain from trade of $6 (thousand). Jane and the dealer bargain over the transaction price, p. If they cannot agree on a price, then the transaction does not occur, and neither party receives any surplus. If instead, Bo can only get $5 (thousand) elsewhere, then the price that maximizes the Nash product changes by S thousand (Enter your response rounded to one decimal place and include a minus sign if necessary) This change in price is in favor:Question 10 Which of the following startements about network externalities is CORRECT? Air pollution is an example of a network externality. For a good with network externalities, the number of people who are willing to buy a unit of the good is uniquely determined by the price. Network externalities are always positive. The manufacturer of a new good with network externalities might give away a free version of the good. For a good with network externalities, one person's valuation of the good is always increasing in the number of other people using the good.
- interested in buying a car from a used car dealer. Her maximum willingness to pay for the car is $20 (thousand). Bo, the dealer, is willing to sell the car as long as he receives at least $8 (thousand). Thus, Jane there is a potential surplus or gain from trade of $12 (thousand). Jane and the dealer bargain over the transaction price, p. If they cannot agree on a price, then the transaction does not occur, and neither party receives any surplus. If instead, Bo can only get $5 (thousand) elsewhere, then the price that maximizes the Nash product changes by $ - 1.5 thousand. (Enter your response rounded to one decirmal place and include a minus sign if necessary.) This change in price is in Jane's favor.You bought a ticket to see Hans Zimmer for $100 next week. You can sell this ticket last minute on Ticketswap for $40. You would have been willing to pay $140 for seeing Hans Zimmer. Enya will play on the same evening, and you won a free ticket for this show, which you cannot sell. The tickets for this show normally cost $50. You are willing to pay a maximum of $80 for the concert of Enya. To which concert should you go and how high are your "economic rents" in this case? The answer is: Hans Zimmer, $20. Could someone explain why?Scott loves to go to baseball games, especially home games of the Cincinnati Reds. All else equal, he likes to sit close to the field. He also like to get to the stadium early to watch batting practice. The close to the stadium he parks, the more batting practice he's able to watch (the garages all open simultaneously). Parking Location Westin Parking garage Fountain Square South Garage West River Parking East River Parking Under Stadium Parking Parking fee (game night) $5 $10 $17 $25 $45 Missed batting practice Westin Parking garage Fountain Square South Garage West River Parking O East River Parking ○ Under Stadium Parking 60 min 50 min 25 min 10 min O min Benefit of arrival time $0 $10 $35 $25 $60 Using the information in the Table above, Scott's optimal parking garage is should park). (hint: use marginal analysis to determine where Scott
- Janelle loves sashimi. Her first piece of sashimi usually gives her a marginal benefit of $5. Each additional piece yields a marginal benefit that declines by $0.25 per piece. If her favorite sushi bar charges $2.75 per piece of sashimi, how many pieces should she eat? [1]Consider the market for apartments. The market price of each apartment is $180,000, and each buyer demands no more than one apartment. Suppose that Sean is the only consumer in the apartment market. His willingness to pay for an apartment is $315,000. Based on Sean's willingness to pay, the following graph shows his demand curve for apartments. Shade the area representing Sean's consumer surplus using the green rectangle (triangle symbols). ? PRICE (Thousands of dollars) 360 315 270 225 180 135 45 0 1 Sean's Demand 2 3 QUANTITY (Apartments) Market Price Sean's Consumer Surplus Now, suppose another buyer, Yvette, enters the market for apartments, and her willingness to pay is $225,000. Based on Yvette's and Sean's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Sean's consumer surplus using the green rectangle (triangle symbols), and shade Yvette's consumer surplus using the purple rectangle (diamond…Consider the market for electric vehicles. The market price of each electric vehicle is $200,000, and each consumer demands no more than one electric vehicle. Suppose that Jake is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $350,000. Based on Jake's willingness to pay, the following graph shows his demand curve for electric vehicles. Shade the area representing Jake's consumer surplus using the green rectangle (triangle symbols). PRICE (Thousands of dollars) 400 Jake's Demand 350 300 250 200 150 100 50 Market Price 0 0 3 4 5 QUANTITY (Electric vehicles) Jake's Consumer Surplus Now, suppose another buyer, Latasha, enters the market for electric vehicles, and her willingness to pay is $250,000. Based on Latasha's and Jake's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Jake's consumer surplus using the green rectangle (triangle symbols), and…
- An important class of externalities to which attention has recently been directed is called information externalities. The information produced by one individual or firm generates benefits for others. The success of an oil well on one tract of land increases the likelihood of oil's being found on an adjacent tract, and hence increases the value of that tract. a) Can you think of other examples of information externalities? b) What are the likely consequences of information externalities for the efficiency of resource allocations? c) Discuss the possibilities of private market solutions to these problems.The figure shows the demand curve for pizza. A) What is the 4 point marginal benefit of pizza number 20? B) What is the maximum price that the consumer wants to pay for pizza number 20? C) If the price of a pizza is $6, what is the consumer surplus for the 20th pizza? d) If the price of a pizza is $10, what is the consumer surplus? e) If the price of a pizza is $6, what is the consumer surplus?23. Anita (A), Ben (B) and Carlos (C) are housemates who have moved to a new house and must decide how to allocate rooms X, Y and Z. An 'allocation' is where each housemate is assigned to exactly one room. For example, Anita → Room Z, Ben → Room X and Carlos → Room Y is allocation (Z, X, Y). Utilities for each room are given below: Room X 7 9 2 Room Y 4 3 7 Room Z 2 1 4 Utility for A Utility for B Utility for C (a) How many possible allocations are there in total? (b) Identify the two allocations which are not Pareto optimal and explain why they are not Pareto optimal. (Hint: is the allocation (Y,Z) Pareto timal?) (c) Suppose we square Carlos' utility from each room (i.e. uc (Z) becomes 16). Would the set of Pareto optimal outcomes change? Why/why not? (d) Returning to the utilities from part (a), which of the Pareto optimal allocations maximise total surplus (utility) and would all housemates weakly prefer this allocation over any other? (e) Suppose the housemates decide to allocate…