problemSet03 - 1 ECONOMICS 100 PROBLEM SET #3 (Consumer...

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ECONOMICS 100 PROBLEM SET #3 (Consumer Theory) For week of October 30, 2006 1. Consumers Surplus, Using Utility Theory Consider the diagram below, and answer the questions that follow: Price 3 $15 1 2 $10 20 30 Quantity 1.0 If price is $15, consumer surplus is area a. 1 b. 2 c. 3 d. 1 + 2 e. 1 + 2 + 3 1.1 If price falls from $15 to $10, then the consumer gain is a. area 1 b. area 2 c. area 3 d. area 1 + 2 e. area 1 + 2 + 3 1.2. If price falls from $15 to $10, then the consumer gain is a. $5 b. $15 c. $100 d. $125 e. $150 1.3. If price falls from $15 to $10, area 1 represents 1 3
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a. the consumer gain, because more units are now being consumed b. the consumer gain, because the units originally purchased at $15 can now be purchased for $10 c. the consumer surplus after the price change d. the total benefit to the consumer from all units purchased e. the marginal benefit to the consumer from the last unit purchased 1.4 If price falls from $15 to $10, area 2 represents a. the consumer gain on the new units now being purchased b. the consumer gain on the units originally purchased, that can now be purchased for $5 less c. the consumer surplus after the price change d. the total benefit to the consumer from all units purchased e. the marginal benefit to the consumer from the last unit purchased.
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This note was uploaded on 08/24/2010 for the course ECO 100 taught by Professor Indart during the Fall '08 term at University of Toronto.

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problemSet03 - 1 ECONOMICS 100 PROBLEM SET #3 (Consumer...

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