Question: . Flintstone has quasilinear preferences and his inverse demand function for Burgers is P ( b ) = 3 0 2 b: He is currently

. Flintstone has quasilinear preferences and his inverse demand function for Burgers is P(b)=302b: He is currently consuming 10 burgers at a price of 10 dollars. (a) How much money would he be willing to pay to have this amount rather than no burgers at all? What is his level of (net) consumer's surplus? [[ans: He will be willing to pay $200(the area under his demand curve up to his consumption of burgers. His consumer's surplus is $100(the trigular area bounded by the demand and the price he pays).]](b) If the price of burgers increases from $10 a burger to $14 a burger, what is Flintstone's change in consumer's surplus? [[ans: At price $10, consumer's surplus is $100. At $14, he demands 8 burgers, for net consumer's surplus of (168)=2=64. The change in consumer's surplus is 10064=36.

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