Question

An individual consumes only one good, the good there. It has the demand curve y =...

An individual consumes only one good, the good there. It has the demand curve y = 15 - (p / 3). The price of the good increases from $ 15 to $ 24.
a) Calculate the change in net consumer surplus due to this price increase.
b) Calculate the change in gross consumer surplus due to this price increase.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Gross consumer surplus is the area below the demand curve till the price point whereas net consumer surplus is the gross surplus after substracting the cost. So, using this, we have

Demad curve is p=45-3y

At $15, y=15-15/3=10

At $24, y=15-24/3=7

a> The net consumer surplus was

The net consumer surplus is

Thus, the change is 150-136.5=13.5

b>

The gross consumer surplus was

The gross consumer surplus is

Thus, the change is 300-241.5 = 58.5

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Urgently needed An individual consumes only one good, the good Y. It has the demand curve...
Urgently needed An individual consumes only one good, the good Y. It has the demand curve y = 15 - (p / 3). The price of the good there increases from $ 15 to $ 24. a) Calculate the change in net consumer surplus due to this price increase. b) Calculate the change in gross consumer surplus due to this price increase.
An individual consumes a single good (y) according to the demand curve y = 200,000 -...
An individual consumes a single good (y) according to the demand curve y = 200,000 - 10,000 p. a) Suppose p = 17 (for part a only). Calculate the price elasticity at this point. b) Find the price for which the price elasticity is equal to -1. c) Find the equation for the marginal revenue.
An individual consumes a single good (y) according to the demand curve y = 200,000 -...
An individual consumes a single good (y) according to the demand curve y = 200,000 - 10,000 p. a) Suppose p = 17 (for part a only). Calculate the price elasticity at this point. b) Find the price for which the price elasticity is equal to -1. c) Find the equation for the marginal revenue.
If one person consumes a public good: Question 2 options: a) others cannot be excluded from...
If one person consumes a public good: Question 2 options: a) others cannot be excluded from enjoying it. b) he or she must pay for it. c) others are excluded from enjoying it. d) the amount of the good available to others is diminished. If demand for a product rises, what happens to consumer surplus, assuming supply holds steady and the market sells at equilibrium prices? Question 3 options: a) Consumer surplus will be smaller after the increase in demand....
A consumer consumes only two commodities, X and Y. Imagine this consumer’s downward sloping demand curve...
A consumer consumes only two commodities, X and Y. Imagine this consumer’s downward sloping demand curve for commodity X, with price on vertical axis and quantity of X consumed on horizontal axis. Imagine two points on this demand curve, with point B falling to the right and lower than point A. Question 9 options: MRSxy is the same at A and B points MRSxy is less at B than at A B represents higher utility than A. Both a) and...
2. An individual consumes products X and Y and spends $25. The pries of the two...
2. An individual consumes products X and Y and spends $25. The pries of the two goods are $3 per unit of X and $2 per unit of Y. The consumer in this case has a utility function expressed as: U(X,Y)=0.5XY          MUX=0.5Y     MUY=0.5X Draw the indifference curve for this consumer at U=20.       (2 pts) Does this consumer’s preference exhibit diminishing MRS?            (1 pt) Express the budget equation mathematically.                        (2pts) Determine the values of X and Y that will maximize utility in the consumption of X...
A. Draw a typical demand curve for gasoline in Charlotte. Label the axis and the demand...
A. Draw a typical demand curve for gasoline in Charlotte. Label the axis and the demand curve. Assume that the current price is $2.65 per gallon. Shade in the consumer surplus in the market. B. What does consumer surplus measure? What are the units for consumer surplus? C. On the same graph as A above, show an increase in price to $2.95. Mark the change in consumer surplus. Is this a loss or a gain in consumer surplus?
Amy has income of $M and consumes only two goods: composite good y with price $1...
Amy has income of $M and consumes only two goods: composite good y with price $1 and chocolate (good x) that costs $px per unit. Her util- ity function is U(x,y) = 2xy; and marginal utilities of composite good y and chocolate are: MUy = 2x and MUx = 2y. (a) State Amy’s optimization problem. What is the objective function? What is a constraint? (b) Draw the Amy’s budget constraint. Place chocolate on the horizontal axis, and ”expenditure all other...
The demand curve for tickets to concert is given as follows: Q = 20 - P....
The demand curve for tickets to concert is given as follows: Q = 20 - P. If the price falls from €5 to €3, what is the change in consumer surplus from concert tickets? an increase of €32 an increase of €225 an increase of €176.50 an increase of €112.50 which is correct ?
The current market price for good Y is above the equilibrium price, and then the price...
The current market price for good Y is above the equilibrium price, and then the price of a subsitute good, X, increases. The demand curve for good Y shifts as a result. What is the likely outcome of the demand shift? A. The shortage increases. B. The surplus decreases. C. The surplus increases. D. The shortage decreases
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT