Consider the market for yachts. The market price of each yacht is $105,000, and each buyer demands no more than one yacht. Suppose that Edison is the only consumer in the yacht market. His willingness to pay for a yacht is $210,000. Based on Edison's willingness to pay, the following graph shows his demand curve for yachts. Shade the area representing Edison's consumer surplus using the green rectangle (triangle symbols). 200 245 Edison's Consumer Surplus

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2. Individual demand and consumer surplus
Consider the market for yachts. The market price of each yacht is $105,000, and each buyer demands no more than one yacht.
Suppose that Edison is the only consumer in the yacht market. His willingness to pay for a yacht is $210,000. Based on Edison's
willingness to pay, the following graph shows his demand curve for yachts.
Shade the area representing Edison's consumer surplus using the green rectangle (triangle symbols).
200
245
Edison's Consumer Surplus
Edison's Demand
210 A
140
Market Price
105 A
70
35
3
QUANTITY (Yschts)
Now, suppose another buyer, Hilary, enters the market for yachts, and her willingness to pay is $140,000.
PRICE (Thousands of dollars)
Transcribed Image Text:2. Individual demand and consumer surplus Consider the market for yachts. The market price of each yacht is $105,000, and each buyer demands no more than one yacht. Suppose that Edison is the only consumer in the yacht market. His willingness to pay for a yacht is $210,000. Based on Edison's willingness to pay, the following graph shows his demand curve for yachts. Shade the area representing Edison's consumer surplus using the green rectangle (triangle symbols). 200 245 Edison's Consumer Surplus Edison's Demand 210 A 140 Market Price 105 A 70 35 3 QUANTITY (Yschts) Now, suppose another buyer, Hilary, enters the market for yachts, and her willingness to pay is $140,000. PRICE (Thousands of dollars)
Based on Hilary's and Edison's respective willingness to pay, plot the market demand curve on the following graph using the blue points
(circle symbol). Next, shade Edison's consumer surplus using the green rectangle (triangle symbols), and shade Hilary'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.
280
245
Demand Curve
210
175
Edison's Consumer Surplus
140
Market Price
105
Hilary's Consumer Surplus
70
35
QUANTITY (Yschts)
Suppose Kevin is willing to pay a total of $70,000 for a yacht.
True or False: Keeping his maximum willingness to pay for a yacht in mind, Kevin will buy the yacht because it would be worth
more to him than its market price of $105,000.
O True
O False
PRICE (Thousands of dollars)
Transcribed Image Text:Based on Hilary's and Edison's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Edison's consumer surplus using the green rectangle (triangle symbols), and shade Hilary'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. 280 245 Demand Curve 210 175 Edison's Consumer Surplus 140 Market Price 105 Hilary's Consumer Surplus 70 35 QUANTITY (Yschts) Suppose Kevin is willing to pay a total of $70,000 for a yacht. True or False: Keeping his maximum willingness to pay for a yacht in mind, Kevin will buy the yacht because it would be worth more to him than its market price of $105,000. O True O False PRICE (Thousands of dollars)
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