Chapter 7 Consumers - Chapter 7 Consumers Producers and the Efficiency of Markets 1 The following information describes the value Lauren Landlord

# Chapter 7 Consumers - Chapter 7 Consumers Producers...

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Chapter 7 Consumers, Producers and the Efficiency of Markets 1.The following information describes the value Lauren Landlord places on having her five houses repainted. She values the repainting of each house at a different amount depending on how badly it needs repainting. Value of new paint in the first house: £5000 Value of new paint in the second house: £4000 Value of new paint in the third house: £3000 Value of new paint in the fourth house: £2000 Value of new paint in the fifth house: £1000 (a) Plot Lauren Landlord’s willingness to pay. (b) If the price to repaint her houses is £5000 each, how many will she repaint? What is the value of her consumer surplus? (c) Suppose the price to repaint her houses falls to £2000 each. How many houses will Lauren choose to have repainted?What is the value of her consumer surplus? (d) What happened to Ms. Landlord’s consumer surplus when the price of having her houses repainted fell? Why? 2.The following information shows the costs incurred by Peter Painter when he paints houses. Because painting is back breaking work, the