Answered: 8. When a package of 4 units is sold…

8. When a package of 4 units is sold for a total price of 20 to a buyer of type 1 , the consumer surplus to that buyer from buying this package is________________. a ) 20 b ) 36 c ) 24 d ) 42 e ) 12

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

8. When a package of 4 units is sold for a total price of 20 to a buyer of type 1 , the consumer surplus to that buyer from buying this package is________________.

a ) 20

b ) 36

c ) 24

d ) 42

e ) 12

9. When at most one package of 4 units is available for a total price of 20 , the maximum price that a buyer of type 1 would pay for a package of 12 units is_____________.

a ) 84

b ) 96

c ) 120

d ) 114

e ) 56

Use the following information to answers questions 6 - 9. Suppose each buyer of type 1 has a
demand curve given by Q1 = 16 - P, and each buyer of type 2 has demand curve given by
Q2 = 12 - 2P. Assume that MC = AC = 4.

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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