Exam 14:Consumers Surplus-Part A

Izaak likes to eat pizza and to fish.The more fishing he does the happier he is,up to 8 hours a day.If he fishes longer than 8 hours he gets a sore back and is less happy than if he hadn't fished at all.For y less than or equal to 8,his utility function is U(x,y)= x +6y,where x is money spent on pizza and y is hours per day spent fishing.His income is $45 a day and he has no expenses other than pizza.The Bureau of Fisheries has just decided to allow people without fishing licenses to fish only 3 hours a day.But if you buy a fishing license,you can fish as many hours as you wish.How much is Izaak willing pay for a license?

Poindexter's utility function is U(x,y)=min{x+2y,3x + y},where x is butter and y is guns.If the price of butter is $4 and the price of guns is $5,what would it cost Poindexter to buy the cheapest bundle that he likes as well as 4 units of butter and 3 units of guns?

If somebody is buying 10 units of x and the price of x falls by $4,then that person's net consumer's surplus must increase by at least $40.

At the initial prices,Teodoro is a net seller of apples and a net buyer of bananas.If the price of apples decreases and the price of bananas does not change,

Sir Plus has a demand function for mead that is given by the equation D(p)=100 - p.If the price of mead is $60,how much is Sir Plus's net consumer's surplus?

If there is a price increase for a good that Marilyn consumes,her compensating variation is the change in her income that allows her to purchase her new optimal bundle at the original prices.

Ella's utility function is min{5x,y}.If the price of x is $10 and the price of y is $15,how much money would she need to be able to purchase a bundle that she likes as well as the bundle (x,y)=(10,25)?

If there is a price increase for a good that Susan consumes,her compensating variation is the change in her income that allows her to purchase her new optimal bundle at the original prices.

Bernice's preferences can be represented by the utility function,U(x,y)=min{x,y}.She faces prices ($2,$1),and her income is $12.If prices change to ($3,$1),the compensating variation

Bernice has the utility function U(x,y)=min{x,y}.The price of x used to be 3 but rose to 4.The price of y remained at 1.Her income is 12.The price increase was as bad for her as a loss of $3 in income.

Lolita,the Holstein cow,has a utility function is U(x,y)= x -x²/2 +y,where x is her consumption of cow feed and y is her consumption of hay.If the price of cow feed is $.30,the price of hay is $1,and her income is $4,and if Lolita chooses the combination of hay and cow feed that she likes best from among those combinations she can afford,her utility will be

Sir Plus has a demand function for mead that is given by the equation D(p)=100 -p.If the price of mead is $90,how much is Sir Plus's net consumer's surplus?

Bernice has the utility function u(x,y)=min{x,y},where x is the number of pairs of earrings she buys per week and y is the number of dollars per week she has left to spend on other things.(We allow the possibility that she buys fractional numbers of pairs of earrings per week. )If she originally had an income of $18 per week and was paying a price of $6 per pair of earrings,then if the price of earrings rose to $10 per pair,the compensating variation of that price change (measured in dollars per week)would be closest to

The number of "Gore in 2004" buttons demanded on a certain university campus is given by D(p)=100 -p,where p is the price of buttons measured in pennies.The supply function is S(p)= p.The current administration manages to enforce a price ceiling of 40A2 per button.The effect on net consumer's surplus is

Ella's utility function is min{5x,y}.If the price of x is $20 and the price of y is $20,how much money would she need to be able to purchase a bundle that she likes as well as the bundle (x,y)= (7,15)?

Bernice's utility function is U(x,y)=min{x,y}.The price of x used to be 3 but rose to 4.The price of y remained at 1.Her income is 12.She would need an income of $15 to be able to afford a bundle as good as her old one at the new prices.

Pablo's utility function is U(x,y)=x + 10y -y²/2,where x is the number of x's he consumes per week and y is the number of y's he consumes per week.Pablo has $200 a week to spend.The price of x is $1.The price of y is currently $5 per unit.Pablo has received an invitation to join a club devoted to the consumption of y.If he joins the club,Pablo can get a discount on the purchase of y.If he belonged to the club,he could buy y for $1 a unit.How much is the most Pablo would be willing to pay to join this club?

If there is Cobb-Douglas utility,compensating and equivalent variation are the same.

Producer's surplus at price p is the vertical distance between the supply curve and the demand curve at price p.

Consumer's surplus is another name for excess demand.