Suppose that Irina is prepared to pay a maximum of $2.40 for her first glass of cranberry juice,but for each subsequent glass she is only prepared to pay 20 cents less than the previous one.
-Refer to the above information to answer this question.If the price of cranberry juice is 80 cents a glass,how much consumer surplus will she receive as a result of her purchases?
A)0.
B)$0.80.
C)$13.60.
D)$14.40.
E)Cannot be determined.

Question

Quizplus · Accepted Answer

Irina's willingness to pay decreases by 20 cents for each subsequent glass. Starting at $2.40 for the first glass, the second glass would be $2.20, the third $2.00, and so on, until her willingness to pay is less than or equal to the market price of 80 cents. To find the number of glasses she would buy, we calculate when her willingness to pay equals the market price. Starting from $2.40 and subtracting 20 cents successively, we find that her willingness equals the market price at the 9th glass ($2.40, $2.20, $2.00, $1.80, $1.60, $1.40, $1.20, $1.00, $0.80). For each glass, her consumer surplus is the difference between what she is willing to pay and the market price. Summing these differences for each of the 9 glasses gives a total consumer surplus of $13.60.

Suppose That Irina Is Prepared to Pay a Maximum of $2.40