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Economics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188124Economics 10th Edition by William McEachern
Edition 10ISBN: 978-1133188124 Exercise 8
CONSUMER SURPLUS Suppose the linear demand curve for shirts slopes downward and that consumers buy 500 shirts per year when the price is $30 and 1,000 shirts per year when the price is $25.
a. Compared to the prices of $30 and $25, what can you say about the marginal valuation that consumers place on the 300th shirt, the 700th shirt, and the 1,200th shirt they might buy each year?
b. With diminishing marginal utility, are consumers deriving any consumer surplus if the price is $25 per shirt? Explain.
c. Use a market demand curve to illustrate the change in consumer surplus if the price drops from $30 to $25.
a. Compared to the prices of $30 and $25, what can you say about the marginal valuation that consumers place on the 300th shirt, the 700th shirt, and the 1,200th shirt they might buy each year?
b. With diminishing marginal utility, are consumers deriving any consumer surplus if the price is $25 per shirt? Explain.
c. Use a market demand curve to illustrate the change in consumer surplus if the price drops from $30 to $25.
Explanation
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a. Consumers' willingness to buy:
Consu...
Economics 10th Edition by William McEachern
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