Question: Suppose that your demand curves for gadgets and widgets are both straight lines but your demand curve for gadgets is much more elastic than your

Suppose that your demand curves for gadgets and widgets are both straight lines but your demand curve for gadgets is much more elastic than your demand curve for widgets. Each is selling at a market price of $10, and at that price you choose to buy exactly 30 gadgets and 30 widgets.
a. From which transaction do you gain more surplus?
b. If forced at gunpoint to buy either an extra gadget or an extra widget, which would you buy?
c. Illustrate the change in your consumer's surplus as a result of the forced transaction of part (b).

Step by Step Solution

★★★★★

3.37 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a From buying the widgets ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

231-B-E-P-T (154).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

A corporation produces output with a market price of $200 per unit. The marginal product of capital is 1/(2K), where K is units of capital, with each unit assumed to cost $1. (So when we talk about...

Suppose that your demand schedule for DVDs is as follows: a. Use the midpoint method to calculate your price elasticity of demand as the price of DVDs increases from $8 to $10 if (i) Your income is...

Suppose that your demand schedule for pizza is as follows: a. Use the midpoint method to calculate your price elasticity of demand as the price of pizza increases from $8 to $10 if (i) your income is...

Multiple choice questions: 15. Which of the following would cause buyers to increase consumption of an inferior good? a. An increase in buyers' incomes B. An increase in the price of a complement C....

Please use the attachment for guidance. Complete each of the following economic problems. Problem A Use the national income data in the table below to compute the following: GDP. NDP. NI....

I. The demand (marginal benefit) curve for pizza slices per month for a small city is as show in the graph below page. Its inverse can be described algebraically as: P = 4 - Q/2) (where P=price and...

Draw the production possibilities frontier for a country that produces only two goods, steeland rice. The curve should be bowed out from the origin. a)What is the economic explanation of the bowing...

Instructions: Answer the following questions. Show your work or explain your reasoning. A B Country S Country S $7 60 40 D 220 200 8 70 50 9 80 60 180 160 10 70 90 100 110 pan 8 8 3 peo 11 80 140 12...

1. Suppose there is an electric bike shop that faces the following demand function Q = 250 - .25 p + 4 ps , where Q is the quantity of e-bikes, p is the price of an e-bike, and ps is the price of a...

I. Which of the following is correct? a) The pivot of the budget line shows the substitution effect while a slope gives the income effect. b) The pivot of the budget line shows the substitution...

Find the derivatives of the following functions. a) f(x) = sin(z') b) g(z) = In(cos(r)) c) h(x) = In(100 + 472)* %3D d) k(x) rein(x)

Can the instantaneous velocity of an object at an instant of time ever be greater in magnitude than the average velocity over a time interval containing the instant? Can it ever be less?

Which of the following statements regarding recovery periods is / are correct? Most cars are 7 - year class life assets. Most office furniture is a 7 - year class life asset. Commercial real estate...

A useless state in a Turing machine is one that is never entered on any input string. Consider the problem of determining whether a Turing machine has any useless states. Formulate this problem as a...

Llowing employees of CIBA Ironworks in Bristol, Illinois, are paid in different frequencies. Some employees have union dues and/or garnishments deducted from their pay. Calculate their net pay, using...

Gasoline having a specific gravity of 0.8 is flowing in the pipe shown at a rate of 5 cfs. What is the pressure at section 2 when the pressure at section 1 is 18 psig and the head loss is 9 ft...

The following figure shows a scatterplot with a regression line. The data are for the 50 states. The predictor is the percentage of adults who smoke. The response is the percentage of high school...

Find the transfer function, 1 (s)/T(s) , for the system shown in Figure P2.19. T(1) 0(1) 1 N-m/rad 1 N-m/rad 1 kg-m? 0000 1 kg-m? 1 N-m-s/rad FIGURE P2.19

days have to be given for payment of call money from the date of service of notice. (i) 14 (iii) 12 (ii) 13 (iv) 11

If your interest rate is 8%, what is the expected value of the present worth of the "extra" insurance payments in Problem 1O-9?

A decision has been made to perform certain repairs on the outlet works of a small dam. For a particular 36-inch gate valve, there are three available alternatives: (a) Leave the valve as it is. (b)...

A man went to Atlantic City with $500 and placed 100 bets of $5 each, one after another, on the same number on the roulette wheel. There are 38 numbers on the wheel and the gaming casino pays 35...

You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $27.5 million....

questions 1-3 PLEASE HELP ME Ratio Analysis at S\&S Air, Inc. the ovapuxy tan complede the mualactare of an in plane teder is paced Maik and Tinsd yete frondid the fimmeing Ex meal E.ESTHUSS Mis....

3. Marketing managers at Home Office Systems, which markets word-processing software to the household consumer, are in the process of preparing annual forecasts and budgeting. Based on their...