Answer to Question #204244 in Microeconomics for Charmelle Gertse

Question

Suppose Lauren, Leslie and Lydia all purchase tablets for R1 500 each. Lauren's willingness to pay was R3 500, Leslie's willingness to pay was R2 500 and Lydia's willingness to pay was R2 000. Total consumer surplus for these three would be

Answer 1

If P is market price, then total consumer surplus is:

$CS = (350 - P) + (300 - P) + (250 - P) = 450.$

$900 - 3P = 450$

$P = R150.$