why the answer is C ? (yes, we know no one rents movies anymore, but it makes a
ID: 1150855 • Letter: W
Question
why the answer is C ?
(yes, we know no one rents movies anymore, but it makes a good example!) Number of movies Amount Dave is willing to Dave's consumer surplus rented per week pay to rent this movie (S)on each movie rental if rice is $5 each 1st 2nd 3rd 4th 5th 6th 7th 10.00 8.00 6.50 5.50 5.00 4.50 4.25 TABLE 6-2 and the 17) Refer to Table 6-2. If Dave rents 3 movies in one week, his total consumer surplus is total amount he pays is A) $24.50; $24.50 B) $19.50; $15.00 C) $9.50; $15.00 D) $6.50, $5.00 E) $5.50; $5.00 Answer: C Diff: 2Explanation / Answer
Dave rents 3 movies. For the 1st movie his willingness to pay is 10 and he pays 5 so his consumer surplus is 10 - 5 = 5. For the 2nd movie his willingness to pay is 8 and he pays 5 so his consumer surplus is 8 - 5 = 3. For the 3rd movie his willingness to pay is 6.50 and he pays 5 so his consumer surplus is 6.50 - 5 = 1.50. Total consumer surplus = 5 + 3 + 1.50 = 9.50.
Total amount he pays is 5 (for 1st) + 5 (for 2nd) + 5 (for 3rd) = $15.
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