Suppose Brian is willing to pay a total of $90,000 for an electric vehicle.True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Brian will buy the electric vehicle because it would be worthmore to him than its market price of $135,000.TrueFalse 2. Individual demand and consumer surplusConsider the market for electric vehicles. The market price of each electric vehicle is $135,000, and each consumer demands no more than oneelectric vehicle.Suppose that Tim is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $270,000. Based on Tim'swillingness to pay, the following graph shows his demand curve for electric vehicles.Shade the area representing Tim's consumer surplus using the green rectangle (triangle symbols).PRICE (Thousands of dollars)360t315PRICE (Thousands of dollars)27022510013512Homework (Ch 07)Now, suppose another buyer, Alyssa, enters the market for electric vehicles, and her willingness to pay is $180,000.300Based on Alyssa's and Tim's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol).Next, shade Tim's consumer surplus using the green rectangle (triangle symbols), and shade Alyssa's consumer surplus using the purple rectangle(diamond symbols).Note: Plot your points as a step function in the order in which you would like them connected. Line segments will connect the points automatically.311270775Tim's Demand100Market Price135Tim's Consumer SurplusMarket PriceDemand Curve?T's Consumer SurplusAlyssa's Consumer Surplus

Market demand is defined as the aggregation of individual demand curves. The individual demand curve…

Suppose Brian is willing to pay a total of $90,000 for an electric vehicle. True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Brian will buy the electric vehicle because it would be worth more to him than its market price of $135,000. True False

Suppose Brian is willing to pay a total of $90,000 for an electric vehicle. True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Brian will buy the electric vehicle because it would be worth more to him than its market price of $135,000. True False

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 1SCQ: Jeremy is deeply in love with Jasmine. Jasmine lives where cell phone coverage is poor, so he can...

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Question

Suppose Brian is willing to pay a total of $90,000 for an electric vehicle.
True or False: Keeping his maximum willingness to pay for an electric vehicle in mind, Brian will buy the electric vehicle because it would be worth
more to him than its market price of $135,000.
True
False

2. Individual demand and consumer surplus
Consider the market for electric vehicles. The market price of each electric vehicle is $135,000, and each consumer demands no more than one
electric vehicle.
Suppose that Tim is the only consumer in the electric vehicle market. Their willingness to pay for an electric vehicle is $270,000. Based on Tim's
willingness to pay, the following graph shows his demand curve for electric vehicles.
Shade the area representing Tim's consumer surplus using the green rectangle (triangle symbols).
PRICE (Thousands of dollars)
360
t
315
PRICE (Thousands of dollars)
270
225
100
135
12
Homework (Ch 07)
Now, suppose another buyer, Alyssa, enters the market for electric vehicles, and her willingness to pay is $180,000.
300
Based on Alyssa's and Tim's respective willingness to pay, plot the market demand curve on the following graph using the blue points (circle symbol).
Next, shade Tim's consumer surplus using the green rectangle (triangle symbols), and shade Alyssa's consumer surplus using the purple rectangle
(diamond symbols).
Note: Plot your points as a step function in the order in which you would like them connected. Line segments will connect the points automatically.
311
270
775
Tim's Demand
100
Market Price
135
Tim's Consumer Surplus
Market Price
Demand Curve
?
T's Consumer Surplus
Alyssa's Consumer Surplus

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