Amazon has an upcoming \\\"lightning deal,\\\" where it will sell a pre-determin
ID: 1219460 • Letter: A
Question
Amazon has an upcoming "lightning deal," where it will sell a pre-determined item at 50% off. At 3:15 pm today, that item happens to be a new netbook. Five college friends, all of whom are in need of a new laptop since their current ones died, set for themselves a different maximum price they are willing to pay. When the deal gets announced, the sale price is $150. On the graph below, draw in the sale price for the laptop and shade in each individual's consumer surplus. When you place these, preserve the order of the corners (what this means is that you maintain the upper left "UL" and the upper right "UR" vertices of each area in their relative position).If the person has no consumer surplus, leave their shaded box where it is.
Explanation / Answer
The consumer surplus is a measure of extra satisfaction the customer gets by buying a product. In numerical terms, the consumer surplus is represented by the difference between the price of a product the consumer is willing to pay and has paid for it. Say for example – In the given question the selling price of the laptop is $ 150. There are five friends ready to buy it. In the question the amount they are ready to pay is not given. So let assume that five friends are A,B,C,D &E and they are ready to pay $130, $140, $150, $160 and $170 respectively for the Laptop.
Student
Actual Price($)
Ready to Pay($)
Consumer Surplus($)
A
150
130
0
B
150
140
0
C
150
150
0
D
150
160
10
E
150
170
20
Here we have consumer surplus only for D and E, which has been greyed out in the graph above.
Student
Actual Price($)
Ready to Pay($)
Consumer Surplus($)
A
150
130
0
B
150
140
0
C
150
150
0
D
150
160
10
E
150
170
20
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