Question 3

3. Consumer surplus for a group of consumers The following graph plots the demand curve (blue line) for several consumers in the market for bluetooth speakers in Meade, a small town located in Kansas. The Meade market price of a bluetooth speaker is given by the horizontal black line at $60. Each rectangle you can place on the following graph corresponds to a particular buyer in this market: orange (square symbols) for Dmitri, green (triangle symbols) for Frances, purple (diamond symbols) for Jake, tan (dash symbols) for Latasha, and blue (circle symbols) for Nick. Use the rectangles to shade the areas representing consumer surplus for each person who is willing and able to purchase a bluetooth speaker at a market price of $60. (Note: If a person will not purchase a bluetooth speaker at the market price, indicate this by leaving his or her rectangle in its original position on the palette.) 180 Dmitri 140 Dmitri Frances 120 100 Frances Jake PRICE (Dollars per bluetooth speaker) 80 Market Price Jake 30 Latasha 40 Nick Latasha 20 0 3 4 Nick QUANTITY (Bluetooth speakers) Based on the information on the previous graph, you can tell that will buy bluetooth speakers at the given market price, and total consumer surplus in this market will be $Suppose the market price of a bluetooth speaker increases to $100. On the following graph, use the rectangles once again to shade the areas representing consumer surplus for each person who is willing and able to purchase a bluetooth speaker at the new market price: orange (square symbols) for Dmitri, green (triangle symbols) for Frances, purple (diamond symbols) for Jake, tan (dash symbols) for Latasha, and blue (circle symbols) for Nick. (Note: If a person will not purchase a bluetooth speaker at the new market price, indicate this by leaving his or her rectangle in its original position on the palette.) (?) 180 Dmitri 140 Dmitri Frances 120 Market Price 100 Frances Jake 80 PRICE (Dollars per bluetooth speaker) 80 Jake Latasha 40 Nick Latasha 20 0 2 3 5 6 7 Nick QUANTITY (Bluetooth speakers) Based on the information in the second graph, when the market price of a bluetooth speaker increases to $100, the number of consumers willing to buy a bluetooth speaker to and total consumer surplus to $4. Consumer surplus for an individual and a market The following graph plots Andrew's monthly demand curve (blue line) for acai bowls. The point denoted by A gives a point along his monthly demand curve. The market price of acai bowls is $2.25 per bowl, given by the horizontal black line. @ Andrew's Monthly Demand 675 T 6.00 1 825 T 450 + 275 T 200 T Price PRICE (Dollars per bowl) g 2 4 G 5 10 12 14 18 18 20 QUANTITY (acai bowls) From the previous graph, you can tell that Andrew is willing to pay for his 6th acai bowl each week. Because he has to pay only $2.25 per bowl, the consumer surplus he gains from the 6th acai bowl is . Suppose the price of acai bowls were to fall to $1.50 per bowl. At this lower price, Andrew would receive a consumer surplus of |$ from the 6th acai bowl he buys. The following graph plots the monthly market demand curve (blue line) for acai bowls in a hypothetical small economy. Use the purple point (diamond symbol) to shade the area representing consumer surplus when the price (P) of acai bowls is $2.25 per bowl. Then, use the green point (triangle symbol) to shade the area representing additional consumer surplus when the price falls to $1.50 per bowl. Small Economy's Monthly Demand 7.50 6.75 Initial Consumer Surplus (P = $2.25) 6.00 5.25 A 4.50 Additional Consumer Surplus (P = $1.50) Demand 3.7 PRICE (Dollars per bowl) 3.00 P = $2.25 2.25 1.50 P = $1.50 0.75 20 40 60 80 100 120 140 160 180 200 QUANTITY (Thousands of acai bowls) Grade It Now Save & Continue