Question

If the market price of an orange increases from $0.80 to $1.05, then consumer surplus. Name First orange Second orange Third orange Allison $2 $1.5 $0.75 Bob $1.5 $1 $0.6 Charisse $0.75 $0.25 $0 Group of answer choices increases by $0.75 decreases by $0.95. decreases by $0.75 decreases by $1.00

Answer 1

Answer: decreases by $0.95.

Explanation:

Allison $2 $1.5 $0.75

Bob $1.5 $1 $0.6

Charisse $0.75 $0.25 $0

so consumer surplus = willingness to pay - market price

market price before = $0.80

consumer surplus before = Allison + Bob + Charisse

consumer surplus before = (1.2 + 0.7 + 0) + ( 0.7 + 0.2 + 0) + ( 0 + 0 + 0)

consumer surplus before = 2.8

market price after = $1.05

consumer surplus after = Allison + Bob + Charisse

consumer surplus after = (0.95 + 0.45 + 0) + ( 0.45 + 0 + 0) + ( 0 + 0 + 0)

consumer surplus after = 1.85

NOW

consumer surplus before - consumer surplus after

2.8 - 1.85 = 0.95

therefore consumer surplus decreases by $0.95

Answer 2

decreases by $0.95.

Step-by-step explanation:

Here is the full question :

For each of three potential buyers of oranges, the table displays the willingness to pay for the first three oranges of the day. Assume Allison, Bob, and Charisse are the only three buyers of oranges, and only three oranges can be supplied per day.

First OrangeSecond OrangeThird OrangeAllison$2.00$1.50$0.75Bob$1.50$1.00$0.60Charisse$0.75$0.25$0

Refer to Table above. If the market price of an orange increases from $0.80 to $1.05, then consumer surplus

Group of answer choices increases by $0.75 decreases by $0.95. decreases by $0.75 decreases by $1.00

Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.

Change in consumer surplus = $1.85 - $2.8 = $-0.95

Please check the attached images for an explanation on how the answer was derived.

I hope my answer helps you