1st attempt O See Hint Andrew pald 40 to buy a potato cannon

1st attempt O See Hint Andrew pald $40 to buy a potato cannon, a cylinder that shoots potatoes hundreds of feet. He was willing to pay $45. When Andrew\'s friend Javier learns that Andrew bought a potato cannon, he asks Andrew if he will sell it for $55, and Andrew agrees. Javier is thrilled because he would have paid Andrew up to $80 for the cannon. Andrew is also delighted. Determine the consumer surplus from the original purchase and the additional surplus generated by the resale of the cannon. Andrew\'s original consumer surplus: Andrew\'s producer surplus from the resale: $ Jave\'s consumer surpls trom the resasle Total surplus generated from the resale: $ 0418 13OF 18QUESTIONS COMPLETED

Solution

- Consumer surplus is difference between the maximum willingness to pay and actual price paid by the consumer.

- Producer surplus is the difference between the price received by the producer and the minimum acceptable price (i.e., cost).

- Total surplus = Producer surplus + consumer surplus.

Using these we can find out the answer as follows;

Andrew\'s original consumer surplus is $5 .

Explaination : As the willingness to pay is $45 and he paid only $40 so consumer surplus = $45 - $40 = $5

Andrew\'s producer surplus from the resale is $15 .

Explaination : As the cost for the potato cannon is $40 and he get the price $55 from resale so his producer\'s surplus will be $55 - $40 = $15

Javler\'s consumer surplus from resale is $25 .

Explaination : the maximum willingness to pay is $80 for Javler and he paid only $55 so the consumer surplus will be $80 - $55 = $25.

Next Question :

Part 1 :

If a slice of pizza costs $3, how many slices will the students buy?

According to the table, students are willing to pay $3 for 3 slices. So in other words, the students will buy 3 slices of pizza at the cost or price of $3.

Next Question :

The seller have sold the beads and string for $5 and you were willing to pay $11 so total surplus from this original purchase is $11 - $5 = $6.

Explaination: You Charged $8 for the beads and string whereas you willing to pay $11 it means your consumer surplus is $11 - $8 = $3. whereas the student who sells you this make a producer surplus of $3 as he get $8 which he get for $5. so total surplus from this original purchase is $3 + $3 = $6.

Now, You value the braclet at $16 so the minimum acceptable price for you (or cost) is $16. and from resale you get $20 for this braclet so your producer surplus will be $20 - $16 = $4 and the stranger\'s consumer surplus will be $10 ( $30 - $20 ) so the total surplus from the sale of braclet is $10 + $4 = $14.

Total surplus generated from the original purchase of beads and string combined with the sale of the braclet to the stranger is $6 + $14 = $20