CRX5 - Take-home Exercise 2 Prof. Potepan Econ 101.01 –...

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Unformatted text preview: Take-home Exercise 2 Prof. Potepan Econ 101.01 – Introductory Microeconomics 3 October 2011 1. Suppose four consumers had the following willingness to pay for slices of pizza. If the price of pizza slices is $4.00 each, calculate the total amount of consumer surplus these consumers would receive from consuming the pizza. Pizza 0 Consumer Groucho Maximum Willingness to Pay $7.50 1 Chico $6.25 _________ 2 Harpo $4.75 _________ 3 Zeppo $3.75 _________ Consumer Surplus _________ Willingness to Pay In the space below, plot the maximum willingness to pay for each consumer, and shade in each of their rectangular areas of consumer surplus. $8.00 $7.50 $7.00 $6.50 $6.00 $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 0 1 2 Pizza 3 4 2. For the following two markets in equilibrium, calculate the Consumer Surplus, Producer Surplus, and Total Surplus. $9.00 $8.00 $7.00 Supply Price $6.00 $5.00 $4.00 $3.00 $2.00 Demand $1.00 $0.00 0 100 200 300 400 Quantity Consumer Surplus = Producer Surplus = Price Total Surplus = $24 $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Supply Demand 0 2,000 4,000 6,000 Quantity Consumer Surplus = Producer Surplus = Total Surplus = 8,000 10,000 ...
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