Asked by Alpha Drone on Jul 17, 2024
Verified
Tammy loves donuts. The table shown reflects the value Tammy places on each donut she eats:
Value of first donut $0.60 Value of second donut $0.50 Value of third donut $0.40 Value of fourth donut $0.30 Value of fifth donut $0.20 Value of sixth donut $0.10\begin{array} { | l | l | } \hline \text { Value of first donut } & \$ 0.60 \\\hline \text { Value of second donut } & \$ 0.50 \\\hline \text { Value of third donut } & \$ 0.40 \\\hline \text { Value of fourth donut } & \$ 0.30 \\\hline \text { Value of fifth donut } & \$ 0.20 \\\hline \text { Value of sixth donut } & \$ 0.10 \\\hline\end{array} Value of first donut Value of second donut Value of third donut Value of fourth donut Value of fifth donut Value of sixth donut $0.60$0.50$0.40$0.30$0.20$0.10
a.Use this information to construct Tammy's demand curve for donuts.
b.If the price of donuts is $0.20, how many donuts will Tammy buy?
c.Show Tammy's consumer surplus on your graph.How much consumer surplus would she have at a price of $0.20?
d.If the price of donuts rose to $0.40, how many donuts would she purchase now? What would happen to Tammy's consumer surplus? Show this change on your graph.
Consumer Surplus
The split between the total amount consumers are prepared to spend on a good or service and the actual amount they spend.
Demand Curve
A diagram that displays the connection between the cost of a commodity and the level of demand for it within a set timeframe.
- Learn about the concept of consumer surplus and how to effectively calculate it at market equilibrium.
- Develop and analyze demand curves by considering personal choices.
Verified Answer
MA
Muhamad AzamuddinJul 21, 2024
Final Answer :
a.
b. At a price of $0.20\$ 0.20$0.20 , Tammy would buy 5 donuts.
c. The figure below shows Tammy's consumer surplus. At a price of $0.20\$ 0.20$0.20 , Tammy's consumer surplus would be $1.00\$ 1.00$1.00 .
d. If the price of donuts rose to $0.40\$ 0.40$0.40 , Tammy's consumer surplus would fall to $0.30\$ 0.30$0.30 and she would purchase only 3 donuts. 
b. At a price of $0.20\$ 0.20$0.20 , Tammy would buy 5 donuts.
c. The figure below shows Tammy's consumer surplus. At a price of $0.20\$ 0.20$0.20 , Tammy's consumer surplus would be $1.00\$ 1.00$1.00 .
d. If the price of donuts rose to $0.40\$ 0.40$0.40 , Tammy's consumer surplus would fall to $0.30\$ 0.30$0.30 and she would purchase only 3 donuts. 
Learning Objectives
- Learn about the concept of consumer surplus and how to effectively calculate it at market equilibrium.
- Develop and analyze demand curves by considering personal choices.