2. Individual demand and consumer surplus Consider the market for loft houses. The market price of each loft house is $150,000, and each consumer demands no more than one loft house. Suppose that Raphael is the only consumer in the loft house market. Their willingness to pay for a loft house is $300,000. Based on Raphael's willingness to pay, the following graph shows his demand curve for loft houses. Shade the area representing Raphael's consumer surplus using the green rectangle (triangle symbols). Raphael's Consumer Surplus 0 1 2 3 4 5 400 350 300 250 200 150 100 50 0 PRICE (Thousands of dollars) QUANTITY (Loft houses) Raphael's Demand Market Price Now, suppose another buyer, Susan, enters the market for loft houses, and her willingness to pay is $200,000. Based on Susan's and Raphael's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol). Next, shade Raphael's consumer surplus using the green rectangle (triangle symbols), and shade Susan'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 Raphael's Consumer Surplus Susan's Consumer Surplus 0 1 2 3 4 5 400 350 300 250 200 150 100 50 0 PRICE (Thousands of dollars) QUANTITY (Loft houses) Market Price Suppose Alex is willing to pay a total of $100,000 for a loft house. True or False: Keeping his maximum willingness to pay for a loft house in mind, Alex will buy the loft house because it would be worth more to him than its market price of $150,000. True False