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Consider a buyer whose valuation for successive units of a good is as follows. q V (q) MV (q) 0 $0 1 2 3 4 $12 $10 $8 $5 where q is quantity, V(q) is the total valuation, and MV (q) is the marginal valuation. 1. Fill out the table. 2. Sketch the buyer's marginal valuation as a function of quantity. Clearly label your graph

Consider a buyer whose valuation for successive units of a good is as follows. q V (q) MV (q) 0 $0 1 2 3 4 $12 $10 $8 $5 where q is quantity, V(q) is the total valuation, and MV (q) is the marginal valuation. 1. Fill out the table. 2. Sketch the buyer's marginal valuation as a function of quantity. Clearly label your graph

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider a buyer whose valuation for successive units of a good is as follows. | \( q \) | \( V(q) \) | \( MV(q) \) | |---|---|---| | 0 | $0 | – | | 1 | $12 | | | 2 | $10 | | | 3 | $8 | | | 4 | $5 | | where \( q \) is quantity, \( V(q) \) is the total valuation, and \( MV(q) \) is the marginal valuation. 1. **Fill out the table.** 2. **Sketch the buyer’s marginal valuation as a function of quantity. Clearly label your graph.**
Transcribed Image Text:Consider a buyer whose valuation for successive units of a good is as follows. | \( q \) | \( V(q) \) | \( MV(q) \) | |---|---|---| | 0 | $0 | – | | 1 | $12 | | | 2 | $10 | | | 3 | $8 | | | 4 | $5 | | where \( q \) is quantity, \( V(q) \) is the total valuation, and \( MV(q) \) is the marginal valuation. 1. **Fill out the table.** 2. **Sketch the buyer’s marginal valuation as a function of quantity. Clearly label your graph.**
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  1. Suppose that the market price is P = $7. In order to maximize his/her gains from trade, how many units does the buyer purchase? Why?

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