On Friday night you dream about eating donuts with chocolate frosting and sprinkles. You wake up Saturday
Question:
On Friday night you dream about eating donuts with chocolate frosting and sprinkles. You wake up Saturday morning with a deep hunger for donuts with chocolate frosting and sprinkles, so you head down to Granny's Gourmet Donuts and see that each chocolate frosted sprinkled donut costs $0.50. You're willing to pay $5 for your first donut. You eat it, but you want more. So you pay another $0.50 for a second donut (which you would have been willing to pay $2 for). Two donuts still aren't enough, so you pay $0.50 for a third donut (exactly the amount you are willing to pay for it). Assuming that Granny's Gourmet Donuts has an upward-sloping supply curve, which of the following is true?
a. You got a smaller amount of consumer surplus for each additional donut eaten Saturday morning.
b. You got the same amount of consumer surplus for each donut (otherwise you wouldn't have kept eating them).
c. Granny's Gourmet Donuts received a larger amount of producer surplus per donut for each donut you bought.
d. Granny's Gourmet Donuts received a smaller amount of producer surplus for each donut you bought.
e. Both a and d
Step by Step Answer:
Introduction To Economics Social Issues And Economic Thinking
ISBN: 9780470574782
1st Edition
Authors: Wendy A. Stock