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ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305631946ECON MACRO 5th Edition by William McEachern
Edition 5ISBN: 978-1305631946 Exercise 7
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
Verified
Verified
a.
Consumers' willingness to buy:
Cons...
ECON MACRO 5th Edition by William McEachern
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