The following information describes the value Lori Landlord places on having her five apartment houses repainted....
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The following information describes the value Lori Landlord places on having her five apartment houses repainted. She values the repainting of each apartment house at a different amount depending on how badly it needs repainting. Value of new paint on 1st apt house $5,000 Value of new paint on 2nd apt house $4,000 Value of new paint on 3rd apt house $3,000 Value of new paint on 4th apt house $2,000 Value of new paint on 5th apt house $1,000 PLEASE NOTE: These amounts are Lori's willingness to pay.. NOT how much money she has. Plot Lori Landlord's willingness to pay. (NO ANSWER REQUIRED HERE.Plot this on paper if you think it might help you answer the questions, but don't worry about turning it in. Plotting it out may help with the remaining questions.) Look at each apartment house individually. Calculate the amount of Consumer Surplus on each individual unit, then add them up. a. If the price to repaint her apartments is $5,000 each, how many will she repaint? What is the value of her consumer surplus? b. Suppose the price to repaint her apartments falls to $2,000 each. How many apartments will Lori choose to have repainted? What is the value of her consumer surplus? c. What happened to Ms. Landlord's consumer surplus when the price of having her apartments repainted fell? Why? The following information describes the value Lori Landlord places on having her five apartment houses repainted. She values the repainting of each apartment house at a different amount depending on how badly it needs repainting. Value of new paint on 1st apt house $5,000 Value of new paint on 2nd apt house $4,000 Value of new paint on 3rd apt house $3,000 Value of new paint on 4th apt house $2,000 Value of new paint on 5th apt house $1,000 PLEASE NOTE: These amounts are Lori's willingness to pay.. NOT how much money she has. Plot Lori Landlord's willingness to pay. (NO ANSWER REQUIRED HERE.Plot this on paper if you think it might help you answer the questions, but don't worry about turning it in. Plotting it out may help with the remaining questions.) Look at each apartment house individually. Calculate the amount of Consumer Surplus on each individual unit, then add them up. a. If the price to repaint her apartments is $5,000 each, how many will she repaint? What is the value of her consumer surplus? b. Suppose the price to repaint her apartments falls to $2,000 each. How many apartments will Lori choose to have repainted? What is the value of her consumer surplus? c. What happened to Ms. Landlord's consumer surplus when the price of having her apartments repainted fell? Why?
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a If the price to repiant her house is 5000 She will have only one option to repaint her only 1st ap... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Posted Date:
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