Homework3

# Homework3 - Homework #3 Problem 1 Consumer Surplus...

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Homework #3 Problem 1 Q d = 11 p 4 discrete, i.e assume that you can attend half an opera, etc. that Fred is forced to attend these operas and pay for the tickets whether he wants to or not. How much consumers surplus does Fred get from attending all 5 operas? Graph this relationship. Depict the CS. Problem 2 curve for minutes of cell phone usage is given by the following equation: Q d = 750 3000 p He is choosing between 3 di/erent cell phone plans. Under plan A, he gets 1000 minutes a month for a fee of \$60. Each minute up to 1000 costs nothing beyond the monthly fee. Under plan T, each minute of use costs 15 cents, but there is no monthly fee. a. Using CS, which plan should Tom choose? b. Suppose that Tom can also choose plan S. Under plan S, he gets 450 free minutes for a monthly fee of \$40. Each minute above 450 costs 11 cents. 1) How many minutes will Tom use? Which plan should he choose? 2) What if each minute above 450 costs 5 cents? How many minutes will Tom use? What is his CS under this plan? Equilibrium, price ceilings, and rationing.

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## This note was uploaded on 03/20/2012 for the course ECON 221 taught by Professor Gordanier during the Fall '08 term at South Carolina.

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Homework3 - Homework #3 Problem 1 Consumer Surplus...

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