B show her consumer surplus on the diagram as the

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b)Show her consumer surplus on the diagram as the difference between the total valuation of the loaves purchased and the cost of purchase.
c)Sketch Yvonne’s demand for bread on the diagram.Yvonne’s demand for bread is the WTP curve, already drawn, but understood as running from price to quantity demanded.X2.16Now consider a small economics class in which there are 5 students, each willing to purchase one and only one copy of a textbook. Students are respectively willing to pay £100, £75, £60, £40 and £30. The campus bookstore has set a price for the text of £40.a)Draw a diagram showing the willingness to pay across students. Explain why the bookshop will sell 4 copies of the textbook, and calculate the total consumer surplus across all the students.2.5QuantityPrice21.510.512345
For use with Robert I. Mochrie, Intermediate Microeconomics, Palgrave, 2016
b)Adapt your diagram so that the vertical axis now measures the (variable) price that the campus bookstore charges. Show how the number of books sold varies with the price that the bookstore sets.
X2.17A new producer of smartphones has to decide the price that it should set for handsets. After conducting some market research, it concludes that the demand for its product can be written as q= 1000.5p, where q is the quantity of handsets and pis the price that the firm can charge.a)Explain why the firm would be unable to give away more than 100 handsets free of charge.
b)Explain why there cannot be any consumer with a WTP greater than 200.
c)Sketch the demand curve for the firm.
Go back to the discussion of the café, recalling the assumption that any consumer can buy any number of cups of coffee for a fixed price:a)Does this maximize the sales revenue that the café might obtain from the consumer? 02040608010012012345Value Books WTP and demand for books
For use with Robert I. Mochrie, Intermediate Microeconomics, Palgrave, 2016
b)Describe a mechanism that might increase revenue further. Do you consider that the café could reasonably introduce such a mechanism?

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