ECON NOT ACCOUNTING

2. Individual demand and consumer surplus Consider the market for yachts. The market price of each yacht is $140,000, and each buyer demands no more than one yacht. Suppose that Musashi is the only consumer in the yacht market. His willingness to pay for a yacht is $245,000. Based on Musashis willingness to pay, the following graph shows his demand curve for yachts. Shade the area representing Musashi's consumer surplus using the green rectangle (triangle symbols). 200 245 Musashi's Demand 210 Mass Consumer Surplus 175 PRICE Thousands of dollars) 140 Market Price 105 To 35 QUANTITY(Yachts) Based on Rina's and Musashi's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol), Next, shade Musashl's consumer surplus using the green rectangle (triangle symbols), and shade Rina'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, 250 o 245 Demand Curve 210 175 Musash's Consumer Surplus Market Price PRICE (Thousands of dollars) 140 105 Rina's Consumer Surplus 70 35 0 0 2 QUANTITY (Yachts) Suppose Sean is willing to pay a total of $105,000 for a yacht True or False: Keeping his maximum willingness to pay for a yacht in mind, Sean will buy the yacht because it would be worth more to him than its market price of $140,000 True False