Dave's Consumer Surplus on Movie Rentals per Week
(yes,we know no one rents movies anymore,but it makes a good example!)
TABLE 6-2
-Refer to Table 6-2.How many movies will Dave rent per week such that the consumer surplus on the last unit is zero?
A)1
B)3
C)5
D)6

Question

Dave's Consumer Surplus on Movie Rentals per Week
(yes,we know no one rents movies anymore,but it makes a good example!)
  TABLE 6-2
-Refer to Table 6-2.How many movies will Dave rent per week such that the consumer surplus on the last unit is zero?
A)1 
B)3 
C)5 
D)6

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum amount a person is willing to pay for a good or service and the amount they actually pay. Looking at the table, we can see that Dave's willingness to pay decreases with each additional rental. When he rents 5 movies, his willingness to pay is $10 per rental. If he were to rent 6 movies, his willingness to pay for the 6th rental would be less than the rental cost, resulting in a negative consumer surplus. Therefore, the last movie rental that provides a zero consumer surplus for Dave is the 5th rental.

Dave's Consumer Surplus on Movie Rentals Per Week