Suppose Yvette just sat down to enjoy the Double Stack burger that she purchased for $1.00. Her friend, Sean, would also like a Double Stack burger, but he strongly dislikes standing in line. Sean offers to buy Yvette's Double Stack rather than wait in line himself and pay $1.00. The following table shows some hypothetical offers Sean might make for Yvette's burger. First, compute the consumer surplus Yvette gets from buying the burger for $1.00, refusing Sean's offers, and eating the burger. Enter these amounts in the second column of the following table. Next, compute the consumer surplus she gets from buying the first burger at $1.00, selling it to Sean at each price listed, purchasing another burger for $1.00, and consuming it. Enter these amounts in the third column of the table. Again, assume that Yvette's cost of waiting in line for a burger is zero. Note: If Yvette is willing to sell her burger to Sean while at the Wendy's restaurant, she would purchase another burger immediately, since the value of the burger ($2.00) remains higher than the price of the burger ($1.00). Yvette's Consumer Surplus from... Purchasing and Consuming Immediately Purchasing, Selling, Purchasing Again, Then Consuming Offer Price from Friend (Dollars) (Dollars) $1.75 $2.25 $2.75 Assuming her cost of waiting in line is zero, what's the lowest of the offers listed in the prior table that Yvette would accept in exchange for her burger? O $1.75 O $2.25 O $2.75
Suppose Yvette just sat down to enjoy the Double Stack burger that she purchased for $1.00. Her friend, Sean, would also like a Double Stack burger, but he strongly dislikes standing in line. Sean offers to buy Yvette's Double Stack rather than wait in line himself and pay $1.00. The following table shows some hypothetical offers Sean might make for Yvette's burger. First, compute the consumer surplus Yvette gets from buying the burger for $1.00, refusing Sean's offers, and eating the burger. Enter these amounts in the second column of the following table. Next, compute the consumer surplus she gets from buying the first burger at $1.00, selling it to Sean at each price listed, purchasing another burger for $1.00, and consuming it. Enter these amounts in the third column of the table. Again, assume that Yvette's cost of waiting in line for a burger is zero. Note: If Yvette is willing to sell her burger to Sean while at the Wendy's restaurant, she would purchase another burger immediately, since the value of the burger ($2.00) remains higher than the price of the burger ($1.00). Yvette's Consumer Surplus from... Purchasing and Consuming Immediately Purchasing, Selling, Purchasing Again, Then Consuming Offer Price from Friend (Dollars) (Dollars) $1.75 $2.25 $2.75 Assuming her cost of waiting in line is zero, what's the lowest of the offers listed in the prior table that Yvette would accept in exchange for her burger? O $1.75 O $2.25 O $2.75
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Now relax the assumption that Yvette's cost of waiting for a Double Stack is zero. Specifically, Yvette values each minute of her time at $0.25.
and
Suppose the wait for a Double Stack is three minutes. Including the value of her time, the cost of obtaining a burger for Yvette is $
her consumer surplus from purchasing and consuming a burger is $
Of the following prices, what's the lowest price she would accept from Sean in exchange for her burger?
O $1.50
O $2.00
$2.50
O $3.00
From the previous analysis, you can conclude that the minimum price at which Yvette is willing to sell her Double Stack burger to Sean
v the shorter her wait in line.
Transcribed Image Text:Suppose Yvette just sat down to enjoy the Double Stack burger that she purchased for $1.00. Her friend, Sean, would also like a Double Stack burger,
but he strongly dislikes standing in line. Sean offers to buy Yvette's Double Stack rather than wait in line himself and pay $1.00.
The following table shows some hypothetical offers Sean might make for Yvette's burger.
First, compute the consumer surplus Yvette gets from buying the burger for $1.00, refusing Sean's offers, and eating the burger. Enter these amounts
in the second column of the following table. Next, compute the consumer surplus she gets from buying the first burger at $1.00, selling it to Sean at
each price listed, purchasing another burger for $1.00, and consuming it. Enter these amounts in the third column of the table. Again, assume that
Yvette's cost of waiting in line for a burger is zero.
Note: If Yvette is willing to sell her burger to Sean while at the Wendy's restaurant, she would purchase another burger immediately, since the value
of the burger ($2.00) remains higher than the price of the burger ($1.00).
Yvette's Consumer Surplus from...
Purchasing and Consuming Immediately Purchasing, Selling, Purchasing Again, Then Consuming
Offer Price from Friend
(Dollars)
(Dollars)
$1.75
$2.25
$2.75
Assuming her cost of waiting in line is zero, what's the lowest of the offers listed in the prior table that Yvette would accept in exchange for her
burger?
O $1.75
O $2.25
O $2.75
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