1. You are one of Lady Gaga\'s little monsters (a fan), yet you do not own her m
ID: 1148952 • Letter: 1
Question
1. You are one of Lady Gaga's little monsters (a fan), yet you do not own her most popular album, The Fame. However, since you have seen so many of her live performances, you have determined your willingness to pay for each track on the album, which are listed in the table below Track 1. Just Dance 2. LoveGame 3. Paparazzi 4. Poker Face 5. Eh, Eh (Nothing Else I Can Say) 6. Beautiful, Dirty, Rich 7. The Fame 8. Money Honey 9. Starstruck 10. Boys Boys Boys WTP ($) 4 0 (a) You can buy the whole album which includes all of the tracks for $8. How much consumer (b) iTunes allows you to purchase individual tracks for $1.50. If you did not buy the entire (c) Between buying the album or buying individual tracks, which gives you the largest con- (d) You just learn Britney Spears is playing in Las Vegas and you decide to go. However, your surplus would you receive by purchasing the album? album, how many individual tracks would you purchase? sumer surplus? willingness to pay for tracks 5-10 on Lady Gaga's Album falls to $O. This implies that Lady Gaga albums and Britney Spears concerts are what type of goods? (e) Given your new willingness to pay for tracks 5-10, what is your consumer surplus when you make the best choice between buying the entire album or buying tracks individually?Explanation / Answer
A 4+3+......+1+1=17-8=9.consumer surplus is simply WTP pay actual price
B 4.the reason is we will purchase anything whose WTP is positive but greater than 1.50
C buying the album. The reason is that then we have to pay only 8 while as we have to pay 10.5(1.5+1.5...+1.5,note we will not pay anything when Wtp is 0) if we buy individual tracks
D substitute goods. They can be substituted for each other
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.