There are four consumers willing to pay the following amounts for an electric car: Consumer 1: $70,000Consumer
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Consumer 1: $70,000Consumer 2: $20,000Consumer 3: $80,000Consumer 4: $40,000
There are four firms that can produce electric cars. Each can produce one car at the following costs:
Each firm can produce at most one car.
Suppose we wanted to maximize the difference between consumers€™ willingness to pay for electric cars and the cost of producing those cars, i.e., we wanted to maximize social surplus.
a. How many electric cars should we produce?
b. Which firms should produce those cars?
c. Which consumers should purchase those cars?
d. Find the maximum social surplus in the electric car market.
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