Econ_101_HW_03_ch_4_5_6_Fall_2011

# Econ_101_HW_03_ch_4_5_6_Fall_2011 - Economics 101-SFSU...

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Economics 101--SFSU Name: Spring 2011 Homework #3 Due Thursday, September 15, 2011 2 points for each question for a total of 80 points, plus 20 points for writing your name. 1. Leon goes to the clothing store to buy a new T-shirt, for which he is willing to pay up to \$10. He picks out one he likes with a posted price of exactly \$10. When he is paying for it, he discovers that the T-shirt is on sale for 50% off the regular price. How much is Leon's consumer surplus? 2. Alberto goes to the CD store hoping to find a used copy of Nirvana's Greatest Hits , and he would be willing to pay up to \$10 for it. The store has one copy selling for \$10, which he purchases. What amount of consumer surplus is generated by this transaction? 3. After soccer practice, Stacey is willing to pay \$2 for a bottle of mineral water. The 7-Eleven sells mineral water for \$2.25 per bottle, so she declines to purchase it. What amount of consumer surplus is generated? 4. Gordon lists his old Lionel electric trains on eBay. He sets a minimum acceptable price, known as his reserve price , of \$75. After five days of bidding, the final high bid is exactly \$75. He accepts the bid. How much producer surplus is generated? 5. Ai-Hee advertises her car for sale in the used-car section of the student newspaper for \$2000, but she is willing to sell the car for any price higher than \$1500. The best offer she gets is \$1200, which she declines. How much producer surplus is generated?

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Sanjay likes his job so much that he would be willing to do it for free. His annual salary is \$80,000. Sanjay's employer likes Sanjay's work so much that she would be willing to pay him \$100,000 per year if he asked for it. Use this information to answer questions 6 and 7. 6. What is the producer surplus generated per year? 7. What is the consumer surplus generated per year? There are six potential consumers of computer games, each willing to buy only one game. Ann is willing to pay \$40 for a computer game.
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Econ_101_HW_03_ch_4_5_6_Fall_2011 - Economics 101-SFSU...

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