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anonymous

  • one year ago

Suppose the market price is $5. The buyer who buys the first unit of output has a willingness-to-buy equal to $10; the buyer who buys the second unit of output has a willingness-to-buy equal to $9; and the buyer who buys the first unit of output has a willingness-to-buy equal to $8. Total consumer surplus is

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  1. jim_thompson5910
    • one year ago
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    focus on `Suppose the market price is $5. The buyer who buys the first unit of output has a willingness-to-buy equal to $10` for now what's the consumer surplus for this one buyer?

  2. anonymous
    • one year ago
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    im thinking $5.00? @jim_thompson5910

  3. jim_thompson5910
    • one year ago
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    yes, subtract the max willingness to buy/pay and the market price

  4. jim_thompson5910
    • one year ago
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    do the same for the other buyers then add up all the individual surpluses

  5. anonymous
    • one year ago
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    ok ...so the other buyer would be 9-5 = 4 do i add the 4 and 5 together? kind of confused

  6. jim_thompson5910
    • one year ago
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    and 8-5 = 3 as well

  7. jim_thompson5910
    • one year ago
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    so, 5+4+3 = 9+3 = 12 is your total consumer surplus

  8. anonymous
    • one year ago
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    ohhh thats what i missed ! ok got it now thank you

  9. jim_thompson5910
    • one year ago
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    no problem

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