Circle the letter of the one answer that you think is correct or closest to corr

Question

Circle the letter of the one answer that you think is correct or closest to correct Use the following to answer questions: Table: Consumer Surplus and Phantom Tickets Student Jessica Jacquelyn Brad Robert Gwen s to $150 125 105 60 25 1. (Table: Consumer Surplus and Phantom Tickets) The table Consumer Surplus and Phantom Tickets shows each student's willingness to pay for a Phantom of the Opera ticket. Assume that each student wants to buy one ticket. If the box office price of a ticket to see Phantom of the Opera is $130 and there is no other market for tickets, the total consumer surplus for the five students is: B) $125 C) $20 D) SO We can measure total consumer surplus for good X as: A) the sum ofthe individual consumer surpluses for all buyers of X. B) the area above the demand curve for X and below the price of X. C) the area bounded by the demand curve for X and the two axes. 125 2. ? D) the area above the supply curve for X.

Explanation / Answer

(1) (C)

A consumer will buy a good only if their maximum willingness to pay is higher than market price. When market price is $130, only Jessica will buy since her maximum willingness to pay is higher than market price ($150 > $130).

Consumer surplus (CS) = Maximum willingness to pay - Market price = $150 - $130 = $20

(2) (A)

Aggregate CS is the sum of all individual CS and is measured by the area enclosed between the market demand curve and market price.

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