Suppose a consumer would be willing to pay \$6 for the first cup of coffee of the day, \$5 for the second cup, \$4 for the third cup and \$3 for the…

a. Suppose a consumer would be willing to pay \$6 for the first cup of coffee of the day, \$5 for the second cup, \$4 for the third cup and \$3 for the fourth cup, \$2 for the fifth cup…

If the price of a cup of coffee is \$3 per cup, how many cups will the consumer buy in a day? ___________________

On the first cup, this consumer earns \$3 in “surplus” because she is willing to pay \$6 but only pay \$3 for the cup

What surplus is earned on the 2nd cup?________________

…the third cup? ___________________

…the fourth cup? __________________

Given that cups are only being consumed in who # units, what is the total surplus this consumer earns on her purchase of 4 cups of coffee per day? ___________________

This is a graph of what the consumer is willing to pay and the market price.

b. The rectangle (fig. below) has an area of 3 = (6-3) x 1 which measures the surplus for the 1st cup.

Fill in the surplus for the 2nd, 3rd, and 4th cups. The sum of your surpluses will equal the total consumer surplus earned by this consumer that you found on the first side data.

What would your consumer surplus look like if you “connected the dots” to draw the D curve – a continuous function?

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