Consider Lisa's total willingness to pay (WTP) for ice cream in the table. If the price of ice...
Question:
Consider Lisa's total willingness to pay (WTP) for ice cream in the table. If the price of ice cream is $1.50 and Lisa aims to maximize her well-being, how many ice creams will she consume and what is the consumer surplus she obtains?
| Quantity | WTP |
|---|---|
| 0 | 0 |
| 1 | 3.00 |
| 2 | 5.50 |
| 3 | 7.50 |
| 4 | 9.00 |
| 5 | 10.00 |
a. 2 ice creams, consumer surplus of 2.50
b. 3 ice creams, consumer surplus of 6.50
c. 4 ice creams, consumer surplus of 7.50
d. 5 ice creams, consumer surplus of 2.50
e. None of the above
Consumer Surplus
Consumer surplus is defined as the difference between what an individual consumer is willing to pay for an item and the price s//he actually has to pay. The consumer surplus is a benefit to the consumer and is related to the utility, or satisfaction or well-being, that the consumer expects from spending on that product.
Likewise, the producer surplus is the amount over the minimum asking price that a seller can get for his products.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerTable with average price and average consumer surplus added:
| Quantity | WTP | Average WTP | Average Consumer Surplus |
| 0 | 0 | 0 | 0 |
| 1 | 3.00 | 3.00 | 1.50 |
| 2 | 5.50 | 2.75 | 2.50 |
| 3 | 7... |
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Consumer Surplus: Definition, Formula & Examples
from
Chapter 7 / Lesson 6
9.3K
Learn the consumer surplus definition and see how it is determined by the people purchasing the product. Study consumer surplus examples using its formula.
Related to this Question
- If Jennie spends her income on ice cream and biscuits and the price of ice cream is three times the price of biscuits, then: a. She maximizes her utility by buying equal quantities of ice cream and biscuits, b. She maximizes her utility by buying three ti
- Suppose Annabelle's favorite ice cream flavor, strawberry, costs $1.50 per cone and chocolate costs $1.00 per cone. If she receives 10 utils when she eats chocolate ice cream, how many additional utils would she need to get from eating strawberry ice crea
- Iggy's Ice Cream Shack sells ice cream. The quantity of output (pounds of ice cream scooped per day) and the corresponding number of workers per day are in the following table:
- 1. Total and marginal utility Alyssa enjoys eating ice cream cones. The following table contains information on Alyssa's utility from ice cream each week. Fill in the two missing cells of the table.
- Lisa has an income of $100. She spends all of her income on pizza and burritos. The price of a pizza equals $10, while the price of a burrito equals $5. However, the store where Lisa buys her burritos has a special deal. After she has bought 6 burritos, t
- Suppose Hubert and Kate are the only suppliers for ice cream cones in a particular market. The following table shows their monthly supply schedules. Plot Hubert's and Kate's supply of ice cream cones. Also, plot the market supple of ice cream cones.
- a) Suppose Amanda spends all of her income of $1,000 on mascara(M), and chocolate (C). The prices per unit are PM=$5 and PC = $10. What is the maximum amount of chocolate that she can consume? i) 1,0
- Suppose you are interested in purchasing just ice cream and cake for an upcoming birthday party. Assume you have only $45 to spend, the price per cake is $10, and the price per package of ice cream is $5. You have estimated the utility (or satisfaction fr
- Suppose Juan has a demand for ice cream that can be expressed as P = 2.50 - .25Q. Furthermore, suppose the ice cream store has a fixed MC = 1.00. What is the largest fixed fee it can charge Juan and s
- Ice cream usually comes in 1.5-quart boxes (48 fluid ounces), and ice cream scoops hold about 2 ounces. However, there is some variability in the amount of ice cream in a box as well as the amount of ice cream scooped out. We represent the amount of ice c
- Suppose Mary's utility function for Wegman's ice cream (W) and Top?s ice cream (T) is U = W + T. Wegman's ice cream costs $5 each and Top?s ice cream costs $4. Mary has $100 income. Find Mary's opti
- The table shows some data on the quantity of ice cream consumed at different prices and at different temperatures. Draw the relationship between the quantity of ice cream consumed and the price of ice cream when the temperature is 50 degrees Fahrenheit.
- Pam has $8 a day to spend on bottled water and ice cream. The price of a bottle of water is $1.00 and the price of an ice cream cone is $2.00. a. Draw Pam's budget line and label it. b. When Pam spends all her budget and she buys 4 ice cream cones, how ma
- Examine the table Total Cost and Output. The table describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. What is the minimum price that Sergei needs to receive for a tub of ice cream in order to stay in business in the l
- Suppose Sarah owns a small company that makes wedding cakes. The table below shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. \\ \begin{matrix} \text{Number of Cakes Per Day} & \text{ Total Cost Per Day}\\ 0
- 4) Consider the market for ice cream cones in a small town. There are many potential ice cream vendors. Demand for ice cream cones is given by P(Q) = 90 - 2Q. a. Suppose all the potential ice cream v
- Which of the following is a sunk cost for an ice cream shop? A) ice cream ingredients B) ice cream cones C) melted ice cream D) an ice cream scoop
- Suppose Bob has a yearly budget of $120 to spend on milk and yogurt. Milk is priced at $2 per gallon, and yogurt is priced at $6 per container. If Bob spends his entire $120 on milk, he can buy _____ gallons of milk. If he spends his entire $120 on yogurt
- Refer to the table above. Each dessert is priced at $1. If you had $10 to spend on desserts, which of the following combinations of goods would you buy? a. 5 units of brownies, 4 units of ice cream,
- At Nice Price for the Ice, an ice cream parlor, customers routinely buy a scoop of ice cream for $3. If consumers purchase one scoop of ice cream at $3, why don't they keep buying more and more scoops for $3 until the store sells out?
- Suppose Icecream company has gained exclusive rights to sell Icecream in State College. The demand for Icecream is Q = 3000 - 60P. The total cost of producing Icecream is C(Q) = 6Q for Q orders of the
- Maggie consumes two goods - chips and popsicles. Show how her budget constraint would shift if the price of chips increased at the same time that the price of popsicles decreased.
- Draw three points that show the quantity of ice cream consumed and the temperature when the price of ice cream is 1.50 Price 50 degrees, 70 degrees, and 90 degrees 0.50. 20. 25. 40 1.50 2.50. 10. 15.
- Consider the milk market in the U.S. There are a number of companies selling milk, so that the market is perfectly competitive. Let's look at Kemps, a firm that produces milk. Assume that Kemp's total
- There is an ice cream monopoly in the town of Eureka. The monopoly firm is deciding how many ice cream carts to distribute in the town. Each cart has a cost of 1. The consumers have a utility for ice cream of V = 10. The unit transport cost of the consume
- Colin and Isabelle both have a weekly dessert budget of $20. The price of an ice cream cone is $2.50, and the price of a candy bar is $1.25. Using a Consumer Choice Theory diagram (budget line & indif
- Suppose that Paulie and Vinny each can produce either ice cream or t-shirts. The table below shows the quantity of each good that Paulie and Vinny each can produce in one hour, respectively, if they d
- Elizabeth owns an ice cream parlor. In one hour, she produces 20 milkshakes and 40 sundaes. Ben also owns an ice cream parlor. In one hour, he can produce 10 milkshakes and 25 sundaes. a. What is Elizabeth's opportunity cost of 1 milkshake? b. What is Ben
- If the owner of an ice cream store on Kirkwood Avenue charges $1.20 for an ice cream cone, her total revenue is $540 per day. If she lowers the price to $1.00, total revenue falls to $500 per day. The demand for ice cream on Kirkwood Avenue is: a. elastic
- After Julia received a raise in her income, she began purchasing more ice cream cones and fewer popsicles. For Julia, popsicles: A. disobey the law of demand. B. are a joint product. C. are a complementary good with ice cream. D. are a normal good. E. are
- The demand for chocolate chip cookie dough ice cream is likely quite elastic because of which of the following: A. ice cream must be eaten quickly. B. this particular flavor of ice cream is viewed as a necessity by many ice-cream lovers. C. the market is
- Mark and Julie are going to sell brownies and cookies. In one day, Mark can make 40 brownies or 20 cookies and Julie can make 15 brownies or 15 cookies. With specialization, how many brownies and cookies will be made in one day?
- The table shows some cost data for Larry's Fortune Cookies operates in a perfectly competitive market. When the market price is $51.67 a batch, Larry produces how many batches of cookies. When Larry p
- Leila bought the perfect combination of oranges and ice cream to enjoy for dinner. Oranges cost $0.50 and icecreams cost $3. If the last orange she eats increases her utility by 1, the last icecream she eats must increase her utility by: a. 1 b. 6 c. 3
- There is an ice cream monopoly in the town of Eureka. The monopoly firm is deciding how many ice cream carts to distribute in the town. Each cart has a cost of 1. The consumers have a utility for ice cream of V=10. The unit transport cost of the consumers
- Jill likes to consume coffee and cream in a very particular way: with every cup of coffee she always consumes two 0.5 oz. cream containers. Jill is a utility maximizer and decides to spend her income is $120 per month on coffee and cream. If the price of
- Suppose that Edison and Hilary are the only consumers of pizza slices in a particular market. The following table shows their weekly demand schedules: |Price (Dollars per slice)| Edison's Quantity Demanded (Slices)| Hilary's Quantity Demanded (Slices) |1|
- Jim buys only milk and cookies. a. In year 1, Jim earns $100, milk costs $2 per quart, and cookies cost $4 per dozen. Draw Jim s budget constraint. b. Now suppose that all prices increase by 10 percent in year 2 and that Jim s salary increases by 10 per
- If Avery is willing to pay $10 for pizza, Pat is willing to pay $13, and Sylvia is willing to pay $15, how much consumer surplus is achieved when the price of pizza is $12?
- Julie sells homemade designer cookies. The marginal cost of producing a cookie depends on how many cookies Julie produces and is given by the formula, MC = 1.2Q. Thus, the first cookie Julie produces
- Jacob receives an allowance of $5 per week. He spends all his allowance on ice cream cones and cans of Lemon Fizz soda. a) If the price of ice cream cones is $0.50 per cone and the price of cans of Le
- If an ice-cream manufacturer acquires a frozen yogurt producer, you would likely see: a. Higher prices for ice cream, but lower prices for frozen yogurt b. Lower prices for both the ice cream and the frozen yogurt c. Higher prices for frozen yogurt but lo
- Scenario: Brenda and Lela are sisters. They both like to make ice cream and cake. Brenda makes one batch of ice cream in eight hours and bakes a cake in two hours. Lela makes one batch of ice cream in
- Bob and Esther each own an ice cream parlor. In an hour, Bob can produce 8 milkshakes or 32 ice cream sundaes and Esther can produce 16 milkshakes or 96 ice cream sundaes. Bob's opportunity cost of producing 1 milkshake is Blank ice cream sundaes. Esthe
- Suppose that Raphael and Susan are the only consumers of ice cream cones in a particular market. The following table shows their monthly demand schedules: On a graph, plot each of Raphael's and Susan's demand for ice cream cones. Also, plot the market dem
- Refer to the table, which gives the total cost schedule for Chip's Pizza Palace, a perfectly competitive firm. If the price of a pizza is $7, what is Chip's profit-maximizing output per hour? A) zero pizzas B) 1 pizza C) 2 pizzas D) 3 pizzas E) 4 piz
- Because of government price controls, a business must now sell soft-serve ice cream at half its original price. This business might respond by: A. offering smaller servings of ice cream. B. skimping on toppings of nuts, fudge sauce, and cherries. C. red
- Jacob buys only milk and cookies. a. In year 1, Jacob earns $100, milk costs $2 per quart, and cookies cost S4 per dozen. Draw Jacob's budget constraint. b. Now suppose that all prices increase by 10 percent in year 2 and that Jacob's salary increases b
- 1. Refer to the table below. If the price of a fudge bar is $2, the price of a Popsicle is $1, and a student has $9 to spend on fudge bars and popsicles, what quantities will she purchase at a consume
- Suppose the price of nail polish is fixed at $5 and Rosa's income is fixed at $25. When the price of lipstick is $10, Rosa buys how many tube(s) of lipstick and when the price of lipstick is $5, Rosa
- Sara's income is $12 a week. The price of popcorn is $3 a bag and the price of a smoothie is $3. What is the equation for Sara's budget line? (Q_s is the quantity of smoothies and Q_P is the quanti
- Suppose a person has $8.00 to spend only on apples and bananas. Apples cost $0.40 each, and bananas cost $0.10 each. A) If this person buys only apples, how many can be purchased? B) If this person bu
- If the price charged for a candy bar is P(x) cents, then x thousand candy bars will be sold in a certain city where P(x)= 14-2x. How many candy bars must be sold to maximize revenue?
- Jane and her boss work as a team selling ice cream. Will there be an efficiency wage in this case? Why?
- Lisa has a constant MRS of tea for coffee 3/4 (she is willing to give up at most 3 cups of coffee to get 4 cups of tea) then, if tea and coffee have the same price, she will do what?
- The table shows some cost data to Meg's Fortune Cookies, which operates in a perfectly competitive market. When the market price is $58.17 a batch. How many batches of cookies does Meg produce?
- Suppose Sarah owns a small company that makes wedding cakes. The table below shows how Sarah's total cost varies depending on the number of wedding cakes she makes each day. The baker business is competitive.A. Compute average fixed costs, average variabl
- For each of the three potential pizza buyers, the table displays the willingness to pay for the first three pizzas of the day. Assume Jen, Kin, and Mary are the only three buyers of pizza, and only three pizzas can be supplied per day. If the market price
- Sue loves ice cream but cannot stand frozen-yogurt desserts. In contrast, Carole likes both foods and can hardly tell the difference between the two. Who will have the more elastic demand for yogurt?
- Suppose a person has $ 8.00 to spend only on apples and bananas. Apples cost $ 0.40 each, and bananas cost $ 0.10 each. a) If this person buys only apples, how many can be bought? b) If this person bu
- Refer to the table below. If the price of a fudge bar is $2, the price of a Popsicle is $1, and a student has $9 to spend on fudge bars and popsicles, what quantities will she purchase at a consumer o
- You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing: a) The benefits from eating all three bowls of ice cream to how much three bowls of ice c
- Tammy's preferences for ice cream, x, and coffee, y, can be represented by the following utility function: U = x^{1/3}y^{2/3}. The price of ice cream is initially $4, and the price of coffee is $1. Ta
- Assume that the price of a pizza is $10, the price of a compact disk is $15, and the price of a movie is $5. How many units of pizza will C. Chang consume if he spends all of his income of $90 a month on these three goods? a. two b. three c. four d. five
- Assume that the price of a pizza is $15, the price of a compact disk is $15, and the price of a movie is $5. How many units of pizza will C. Chang consume if he spends all of his income of $90 a month on these three goods. a. two b. three c. four d. five
- Brenda's Nice Nails is a manicuring business in a perfectly competitive market in lthaca. The market price of a manicure is $25 00. The table shows Brenda's total costs. How many manicures does Brenda
- Suppose for Donnie, cookies and milk are perfect complements. For every cookie he eats, he wants one glass of milk. Suppose his allotted income for cookies and milk is $12 per week, the price of cooki
- Suppose Al Fresco enjoys going to eat at Italian restaurants where the average meal costs $45.00 and he has $450.00 to spend. In terms of purchasing power, how much is Al Fresco's money worth?
- The ice cream experiment consisted of graduates students given either a medium-sized 17-ounce bowl or large-sized 34-ounce bowls. Each student was invited to take as much of four different flavors of ice cream as he or she wanted. The size of the scoop al
- Consider the following table showing the Maximum Willingness to Pay for eggs, for two people, Julius and Brutus |MWP (4)|Quantity of Eggs (Julius)|Quantity of Eggs (Brutus |0|100|50 |1|90|45 |2|80|40
- Jim buys only milk and cookies. In year 1, Jim earns $100, milk costs $2 per quart, and cookies cost $4 per dozen. Draw Jim's budget constraint.
- Bart consumes apples and bananas; he likes both of these fruits. Denote by x_a as the amount of apples and x_b epsilon as the amount of bananas. His consumption bundle
- Suppose you win a sweepstake that allows you to consume as much pizza as you want within a year. Despite the zero price of a pizza, you do not eat pizza every meal. This is because: a. of diminishing the total utility of pizza. b. of diminishing average
- Julie wants to purchase a burger from Bill. The most Julie would like to pay is $9. Bill would be willing to offer the burger for $5. How large are the potential gains from trade (for both Julie and Bill)?
- Suppose that the company "Ann's lemonade stand" uses labor as its only input. The following table shows how many glasses of lemonade Ann's lemonade stand can produce using different amounts of labor. |Labor (hour) |Glasses of Lemonade | 0| 0 |1 |50 | 2
- Which of the following is an example of a menu cost? Select all that apply: a. Lisa cannot decide what to order at a restaurant as prices seem too high, b. Ron's retail clothing business needs to pay the local printing shop to make new catalogs due to an
- Bill works for a large food service company. In one hour he can make 10 sandwiches or he can make 37 salads. Bill works 7 hours per day. If Bill needs to make 37 sandwiches then how many salads can he
- The table shows Jerry's total utility from burgers and magazines. The price of a burger is $2, the price of a magazine is $4, and Jerry has $12 a week to spend. When Jerry maximizes his total utility, what quantities of burgers and magazines does he buy i
- Suppose 10 people each have the demand Q = 20 - P for streetlights and 4 people have the demand Q = 18 - 2P for streetlights. The cost of building each streetlight is 20. How many streetlights are socially optimal?
- Kelly works at an ice cream shop and observes that the number of people buying ice cream varies greatly from day to day. For a couple of weeks, she has recorded the number of people at the shop each day, as well as the daily temperature. If Kelly is using
- Assume that consumers are uniformly distributed along a one-mile stretch of beach. A number of ice cream vendors are pondering where to position their carts. If the price they are allowed to charge is
- Bianca bakes delicious cookies. Her total fixed cost is $40 a day, and her average variable cost is $1 a bag. Few people know about Bianca's Cookies, and she is maximizing her profit by selling 10 bag
- Suppose that Donald has $200 to spend per week and he buys only ice cream and pizza. Suppose further than pizza is a normal good and that for pizza income effect dominates the substitution effect. If the price of a pizza doubles, which of the following is
- The following table gives the demand and supply schedules for chocolate brownies. If buyers are taxed by 20 cents per brownie, what will be the price of a brownie and how many will be bought? Also, who pays the tax? | Price (cents per brownie) | Quantit
- Jim buys only bananas and CDs. Suppose that Jim's income is $40, bananas cost $0.80 per pound, and CDs cost $8 each. Write the equation for Jim's budget constraint and graph it. Suppose that Jim's opt
- Suppose an individual's MRS of steak for beer is 3:1. That is, at the current consumption choices he or she is willing to give up 3 beers to get an extra steak. Suppose also that the price of a steak is $12 and a beer is $3. Then, in order to increase the
- Suppose that Tiffany has an income of $20 per week and she spends it on frozen pizza (P) and beer (B).The price of a bottle of beer (PB) is $1 and the price of frozen pizza (Pp) is $5 per pizza. (a)
- You are using money as a store of value when you A. purchase an ice cream cone. B. save for a vacation. C. tell a friend how much you paid for your new car. D. buy something on sale and get good value for your money.
- Hilary lives in Dallas and loves to eat desserts. She spends her entire weekly allowance on yogurt and pie. A bowl of yogurt is priced at $1.25, and a piece of pumpkin pie is priced at $3.75. At her c
- Calculate the average product of four students. Lisa has a lawn-mowing business. Lisa hires students to mow the lawns. Her workers go from property to property in the summer, mowing lawns. The table below sets out Lisa's total product schedule (i.e., outp
- Jim buys only bananas and CDs. Suppose that Jim's income is $40, bananas cost $0.80 per pound, and CDs cost $8 each. (a) Write the equation for Jim's budget constraint and graph it. (b) Suppose that
- Giselle is starting up a Food Van where she sells burgers. a. What would be some implicit costs? b. What would be some variable costs?
- Based on the tables below, if Heath and Cliff are the only buyers in the pizza market and Cathy is the only seller, what is the total benefit to society of this market? || Price of Pizza || Quantity Demanded by Heath || Quantity Demanded by Cliff | $15
- Sara's income is $12 a week. The price of popcorn is $3 a bag, and the price of a smoothie is $3. a. Calculate the equation for Sara's budget line (with bags of popcorn on the left side). b. Draw a graph of Sara's budget line with the quantity of smoothie
- Dan's ice cream shop is a perfectly competitive firm selling 100 ice cream cakes per day. The market price of a cake is $10, AVC is $9 and its AFC is $2. Should Dan continue to produce, increase production, decrease production, or shut down his cake busi
- Paulette owns a pizza parlor. Her total cost schedule is in the above table. Her marginal cost of producing the fifth pizza is _.
- Assume that fixed costs are $10. What is the average total cost of 4 cakes? A. $25.00 B. $12.00 C. $35.00 D. $9.50
Explore our homework questions and answers library
Browse
by subject