< > MyCalStateLA - Home + Quiz: Mid-term 1 ECON 2010 Worksheet 4.docx NOMICS I: MICROECON ECON... calstatela.instructure.com Assignments > Worksheet 4 Worksheet 4 Course Hero + Download A Alternative formats Info Close Page 1 > of 2 - ZOOM + Worksheet 4 Chapter 4 - Consumer and Producer Surplus 1. In the early 1990s, the Chrysler Corporation released the best-selling SUV, the Jeep Grand Cherokee. At the time of release, the Grand Cherokee came in three different models, each model offering unique features. Today, the Grand Cherokee is sold in ten unique models. Why do firms provide unique models and how does increasing the number of models affect producer surplus? 2. Determine the amount of consumer surplus generated in each of the following situations. a. Bo goes to the clothing store to buy a new T-shirt, for which he is willing to pay up to $10. He picks out one he likes with a price tag of exactly $10. When he is paying for it, he learns that the T-shirt has been discounted by 50%. b. Alberto goes to the music store hoping to find a used copy of Nirvana's Nevermind for up to $30. The store has one copy of the record selling for $30, which he purchases. c. After soccer practice, Stephani is willing to pay $2 for a bottle of mineral water. The 7- Eleven sells mineral water for $2.25 per bottle, so she declines to purchase it. < > MyCalStateLA - Home + Quiz: Mid-term 1 calstatela.instructure.com ECON 2010 Worksheet 4.docxNOMICS I: MICROECON ECON... > Assignments Worksheet 4 Worksheet 4 Course Hero Download A Alternative formats Info Close Page < 1 > of 2 - ZOOM + 2. Determine the amount of consumer surplus generated in each of the following situations. a. Bo goes to the clothing store to buy a new T-shirt, for which he is willing to pay up to $10. He picks out one he likes with a price tag of exactly $10. When he is paying for it, he learns that the T-shirt has been discounted by 50%. b. Alberto goes to the music store hoping to find a used copy of Nirvana's Nevermind for up to $30. The store has one copy of the record selling for $30, which he purchases. c. After soccer practice, Stephani is willing to pay $2 for a bottle of mineral water. The 7- Eleven sells mineral water for $2.25 per bottle, so she declines to purchase it. 3. Determine the amount of producer surplus generated in each of the following situations. a. Conner lists his old Lionel electric trains on eBay. He sets a minimum acceptable price, known as his reserve price, of $75. After five days of bidding, the final high bid is exactly $75. He accepts the bid. < > MyCalStateLA - Home + Quiz: Mid-term 1 ECON 2010 Worksheet 4.docx NOMICS I: MICROECON ECON... calstatela.instructure.com Assignments > Worksheet 4 Worksheet 4 Course Hero +0 Download A Alternative formats Info Close Page < 2 of 2 - ZOOM + b. So-Hee advertises her car for sale in the used-car section of the student newspaper for $2,000, but she is willing to sell the car for any price higher than $1,500. The best offer she gets is $1,200, which she declines. c. Sanjay likes his job so much that he would be willing to do it for free. However, his annual salary is $80,000. 4. There are six potential consumers of computer games, each willing to buy only one game. Consumer 1 is willing to pay $40 for a computer game, consumer 2 is willing to pay $35, consumer 3 is willing to pay $30, consumer 4 is willing to pay $25, consumer 5 is willing to pay $20, and consumer 6 is willing to pay $15. a. Suppose the market price is $29. What is the total consumer surplus? b. The market price decreases to $19. What is the total consumer surplus now? c. When the price fell from $29 to $19, how much did each consumer's individual consumer surplus change? How does total consumer surplus change?