Consider the market for apartments. The market price of each apartment is $300,000, and each buyer demands no more than one apartment.Suppose that Lorenzo is the only consumer in the apartment market. His willingness to pay for an apartment is $480,000. Based on Lorenzo's willingness to pay, the following graph shows his demand curve for apartments.Shade the area representing Lorenzo's consumer surplus using the green rectangle (triangle symbols). Shade the area representing Lorenzo's consumer surplus using the green rectangle (trianglesymbols).Lorenzo's Demand420Lorenzo's Consumer SurplusMarket Price300240QUANTITY (Apartments)PRICE (Thousands of dolara) Now, suppose another buyer, Neha, enters the market for apartments, and her willingness to payis $360,000.Based on Neha's and Lorenzo's respective willingness to pay, plot the market demand curve on thefollowing graph using the blue points (circle symbol). Next, shade Lorenzo's consumer surplususing the green rectangle (triangle symbols), and shade Neha's consumer surplus using the purplerectangle (diamond symbols).Note: Plot your points as a step function in the order in which you would like them connected. Linesegments will connect the points automatically.Demand CurveMarket PriceLorenzo's Connumer Surpkun240Neha's Consumer SurgkusQUANTITY (Aptmerts)Suppose Sam is willing to pay a total of $240,000 for an apartment.True or False: Keeping his maximum willingness to pay for an apartment in mind, Sam will not buythe apartment because it would be worth less to him than its market price of $300,000.TrueFalsePRICE (Thousands of dolars)

Market demand: Individual demand is the demand for a commodity or service by a single customer at a…

Answered: True or False: Keeping his maximum…

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 the market for apartments. The market price of each apartment is $300,000, and each buyer demands no more than one apartment.

Suppose that Lorenzo is the only consumer in the apartment market. His willingness to pay for an apartment is $480,000. Based on Lorenzo's willingness to pay, the following graph shows his demand curve for apartments.

Shade the area representing Lorenzo's consumer surplus using the green rectangle (triangle symbols).

Now, suppose another buyer, Neha, enters the market for apartments, and her willingness to pay
is $360,000.
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.
Demand Curve
Market Price
Lorenzo's Connumer Surpkun
240
Neha's Consumer Surgkus
QUANTITY (Aptmerts)
Suppose Sam is willing to pay a total of $240,000 for an apartment.
True or False: Keeping his maximum willingness to pay for an apartment in mind, Sam will not buy
the apartment because it would be worth less to him than its market price of $300,000.
True
False
PRICE (Thousands of dolars)

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