Suppose the linear demand curve for shirts slopes downward and that consumers buy 500 shirts per year
Question:
a. Compared to the prices of $30 and $25, what can you say about the marginal valuation that consumers place on the 300th shirt, the 700th shirt, and the 1,200th shirt they might buy each year?
b. With diminishing marginal utility, are consumers deriving any consumer surplus if the price is $25 per shirt? Explain.
c. Use a market demand curve to illustrate the change in consumer surplus if the price drops from $30 to $25.
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Related Book For
Microeconomics A Contemporary Introduction
ISBN: 978-1111415921
9th edition
Authors: William A. McEachern
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