On Thursday nights, a local restaurant has a pasta special. Ari likes the restau

Question

On Thursday nights, a local restaurant has a pasta special. Ari likes the restaurant's pasta, and his willingness to pay for each serving is shown in the accompanying table.

A.) If the price of a serving of pasta is $4, how many servings will Ari buy? How much consumer surplus does her receive?

B.) The following week, Ari id back as the restaurant again, but now the price of a serving of pasta is $6. By how much does this consumer surplus decrease compared to the previous week?

C.) One week later, he goes to the restaurant again. He discovers that the restaurant is offering an "all-you-can-eat" special $25. How much pasta will Ari eat, and how much consumer surplus does he receive now?

Quantity of pasta (servings) Willingness to pay for pasta (per serving) 1 $10 2 $8 3 $6 4 $4 5 $2 6 $0

Explanation / Answer

(A) If the price of Pasta is $4 , then Ari will buy 4 servings of pasta. His consumer surplus = ($10-$4) + ($8-$4) + ($6-$4) + ($4-$4) = $(6 + 4 + 2 +0)= $ 12.

(B) If the price is $6 , then Ari will buy 3 servings of pasta. His consumer surplus = ($10-$6) + ($8-$6)+ ($6-$6) = $(4 + 2 + 0) = $6. This implies that his consumer surplus decreased by $(12-6)= $6 compared to the previous week.

(C) If there is an "all-you-can-eat" special , the price Ari pays per serving is zero. Therefore, he will eat six servigs of pasta. The total amount he is willing to pay for those 6 servings is $30 i.e ($10+ $8 + $6 + $4 + $2+ $0) .Since, he actually pays $25 , his consumer surplus is ($30-$25)= $5.

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.