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21 June, 18:32

Kat is willing to pay $900 for 25 bottles of grape wine. The market price of 15 boties of grape wine is $390. Because of an increasein the price of grapes, the price of grape wine increases to $450 for 15 bottles. Kat's consumer surplus has decreased A consumer has the following demand schedule for a grape wine bottle. Each bottle's price is the same as the marginal benefit by because of an increase in the price of grapes (Enter your response as a whole number.) Quantity Demandoa Price 300 240 210 Suppose the market price of a grape wine bottle is $220 per unit. Calculate the consumer surplus and the consumer's total benefit Consumer surplus is S. and the consumer's total benefit is S□ Enter your responses as whole numbers.

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  1. 21 June, 19:02
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    Answer explained below

    Explanation:

    decrease in consumer surplus = 0.5 (initial number of bottles - final number) * (final price-initial price) + (final price-initial price) * (final number)

    where initial number of bottles = 25

    final number of bottles = 15

    initial price = $390

    final price = $390

    substituting these values, we have

    - decrease in consumer surplus = 0.5 (25-15) (450-390) + (450-390) 15 = 1200

    Consumer surplus decreases by 1200

    - Consumers will buy the good as long as marginal benefit is greater than or equal price.

    Thus quantity demanded will be 2 from the table

    Consumer surplus = 240 - market price = 240 - 220 = 20

    Consumers total benefit = 220*quantity demanded = 220*2 = 440
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