der the market for electric vehicles. The market price of each electric vehicle is $320,000, and each consumer demands no more than one electric vehicle. Suppose that Lorenzo is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $560,000. Based on Lorenzo's willingness to pay, the following graph shows his demand curve for electric vehicles.

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Chapter1: Making Economics Decisions
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Consider the market for electric vehicles. The market price of each electric vehicle is $320,000, and each consumer demands no more than one
electric vehicle.
Suppose that Lorenzo is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $560,000. Based on
Lorenzo's willingness to pay, the following graph shows his demand curve for electric vehicles.
Shade the area representing Lorenzo's consumer surplus using the green rectangle (triangle symbols).
PRICE (Thousands of dollars)
640
560
400
400
320
240
160
80
0
0
Lorenzo's Demand
1
2
QUANTITY (Electric vehicles)
Market Price
Lorenzo's Consumer Surplus
(?)
Now, suppose another buyer, Neha, enters the market for electric vehicles, and her willingness to pay is $480,000.
Transcribed Image Text:Consider the market for electric vehicles. The market price of each electric vehicle is $320,000, and each consumer demands no more than one electric vehicle. Suppose that Lorenzo is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $560,000. Based on Lorenzo's willingness to pay, the following graph shows his demand curve for electric vehicles. Shade the area representing Lorenzo's consumer surplus using the green rectangle (triangle symbols). PRICE (Thousands of dollars) 640 560 400 400 320 240 160 80 0 0 Lorenzo's Demand 1 2 QUANTITY (Electric vehicles) Market Price Lorenzo's Consumer Surplus (?) Now, suppose another buyer, Neha, enters the market for electric vehicles, and her willingness to pay is $480,000.
Based on Neha's and Lorenzo's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle
Symbol). Next, shade Lorenzo's consumer surplus using the green rectangle (triangle symbols), and shade Neha'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.
PRICE (Thousands of dollars)
640
500
400
400
320
240
100
80
O
0
QUANTITY (Electric vehicles)
Market Price
Suppose Sam is willing to pay a total of $240,000 for an electric vehicle.
Demand Curve
Lorenzo's Consumer Surplus
Neha's Consumer Surplus
True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Sam will buy the electric vehicle because it would be worth
more to him than its market price of $320,000.
Transcribed Image Text:Based on Neha's and Lorenzo's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle Symbol). Next, shade Lorenzo's consumer surplus using the green rectangle (triangle symbols), and shade Neha'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. PRICE (Thousands of dollars) 640 500 400 400 320 240 100 80 O 0 QUANTITY (Electric vehicles) Market Price Suppose Sam is willing to pay a total of $240,000 for an electric vehicle. Demand Curve Lorenzo's Consumer Surplus Neha's Consumer Surplus True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Sam will buy the electric vehicle because it would be worth more to him than its market price of $320,000.
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