Essay
Suppose that Mary's willingness to pay for T-shirts is $20 for one T-shirt, $26 for two T-shirts, $30 for three T-shirts, and $32 for four T-shirts. Draw Mary's demand curve for T-shirts. If the price of a T-shirt is $6, how many T-shirts would Mary buy? What is Mary's consumer surplus? Show the consumer surplus in a diagram. Now suppose that a sale reduces the price of T-shirts to $4. How many T-shirts will Mary buy now? What is the new consumer surplus?
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Correct Answer:
Verified
If the price of a T-shirt is $6, then M...View Answer
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