Question

A college student enjoys drinking hand-crafted ginger beer. Her willingness to pay for each bottle is shown in the following table.

Number of bottles	Willingness to pay (per bottle)
1	$5
2	$4
3	$3
4	$2
5	$1
6	$0

1st attempt

Part 1(2 pts)

See Hint

If a bottle of hand-crafted ginger beer costs $2, how many bottles will the student buy?
     bottles of hand-crafted ginger beer.  

How much consumer surplus will she enjoy? Assume that the student will purchase bottles up to, but not including, the point at which she incurs a loss of consumer surplus.
   $   in consumer surplus.

Part 2(2 pts)

See Hint

If the price of a bottle falls to $1, how many bottles of hand-crafted ginger beer will she buy?
     bottles of hand-crafted ginger beer.   

How much consumer surplus will she enjoy? Assume that the student will purchase bottles up to, but not including, the point at which she incurs a loss of consumer surplus.
   $   in consumer surplus.

Answer 1

Consumer surplus is the area below demand curve and above market price. It is the difference between what consumers are willing to pay and what they actually pay..

Price = $2.

The student will buy 4 bottles.

Consumer surplus would be ($5-$2)+($4-$2)+($3-$2)+($2-$2)= $3 + $2 + $1 + $0)=$6.

There is no consumer surplus on the 4th bottle because the willingness to pay and price are same.

Total consumer surplus is $6.

If Price is $1.

The student will buy 5 bottles.

Consumer surplus would be ($5-$1)+($4-$1)+($3-$1)+($2-$1) +($1-$1)= $4 + $3 + $2 +$1 + $0=$10

There is no consumer surplus on the 5th bottle because the willingness to pay and price are same.

Total consumer surplus = $10.