Consider the market for electric vehicles. The market price of each electric vehicle is $280,000, and each consumer demands no more than one electric vehicle. Suppose that Andrew is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $490,000. Based on Andrew's willingness to pay, the following graph shows his demand curve for electric vehicles. Shade the area representing Andrew's consumer surplus using the green rectangle (triangle symbols). PRICE (Thousands of dollars) 560 490 PRICE (Thousands of dollars) 420 350 280 210 140 70 0 560 490 420 350 0 280 210 1 Now, suppose another buyer, Beth, enters the market for electric vehicles, and her willingness to pay is $420,000. Andrew's Demand Based on Beth's and Andrew's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Andrew's consumer surplus using the green rectangle (triangle symbols), and shade Beth'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. ? 140 + 2 QUANTITY (Electric vehicles) 3 Market Price 5 Andrew's Consumer Surplus Market Price Demand Curve (?) Andrew's Consumer Surplus Beth's Consumer Surplus
Consider the market for electric vehicles. The market price of each electric vehicle is $280,000, and each consumer demands no more than one electric vehicle. Suppose that Andrew is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $490,000. Based on Andrew's willingness to pay, the following graph shows his demand curve for electric vehicles. Shade the area representing Andrew's consumer surplus using the green rectangle (triangle symbols). PRICE (Thousands of dollars) 560 490 PRICE (Thousands of dollars) 420 350 280 210 140 70 0 560 490 420 350 0 280 210 1 Now, suppose another buyer, Beth, enters the market for electric vehicles, and her willingness to pay is $420,000. Andrew's Demand Based on Beth's and Andrew's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Andrew's consumer surplus using the green rectangle (triangle symbols), and shade Beth'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. ? 140 + 2 QUANTITY (Electric vehicles) 3 Market Price 5 Andrew's Consumer Surplus Market Price Demand Curve (?) Andrew's Consumer Surplus Beth's Consumer Surplus
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:2. Individual demand and consumer surplus
Consider the market for electric vehicles. The market price of each electric vehicle is $280,000, and each consumer demands no more than one
electric vehicle.
Suppose that Andrew is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $490,000. Based on
Andrew's willingness to pay, the following graph shows his demand curve for electric vehicles.
Shade the area representing Andrew's consumer surplus using the green rectangle (triangle symbols).
PRICE (Thousands of dollars)
560
490
PRICE (Thousands of dollars)
420
350
280
210
70
0
560
490
420
350
Now, suppose another buyer, Beth, enters the market for electric vehicles, and her willingness to pay is $420,000.
280
Based on Beth's and Andrew's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle
symbol). Next, shade Andrew's consumer surplus using the green rectangle (triangle symbols), and shade Beth'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.
210
140
0
70
0
0
Andrew's Demand
3
QUANTITY (Electric vehicles)
O True
●False
Market Price
2
QUANTITY (Electric vehicles)
Andrew's Consumer Surplus
Market Price
5
Suppose Darnell is willing to pay a total of $210,000 for an electric vehicle.
Demand Curve
Andrew's Consumer Surplus
(?
Beth's Consumer Surplus
True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Darnell will buy the electric vehicle because it would be worth
more to him than its market price of $280,000.
(?)
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