Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.

-Refer to Table 7-5.Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Question

Table 7-5
For each of three potential buyers of oranges,the table displays the willingness to pay for the first three oranges of the day.Assume Alex,Barb,and Carlos are the only three buyers of oranges,and only three oranges can be supplied per day.
 
-Refer to Table 7-5.Who experiences the largest loss of consumer surplus when the price of an orange increases from $0.70 to $1.40?

Quizplus · Accepted Answer

Alex experiences the largest loss of consumer surplus because he has the highest willingness to pay for the first orange ($2.50). If the price of an orange increases from $0.70 to $1.40, he would no longer be willing to pay for the third orange, resulting in a loss of consumer surplus equal to ($2.50-$1.40) = $1.10. Barb and Carlos have lower willingness to pay values for the first orange, so they would not experience as large of a loss in consumer surplus at the higher price.

Table 7-5 For Each of Three Potential Buyers of Oranges,the Table Displays