Question

1. Here is Jimmy's total value schedule for mangoes. 4 54 5 65 8 92 TV 15 29 42 75 84 MV 15 14 13 12 11 10 9 8 a. Find Jimmy's demand curve (schedule) for mangoes. Here is Robert's total value schedule for mangoes. TV 12 23 33 42 50 57 63 68 MV 12 11 10 9 8 7 6 5 b. Find Robert's supply curve (schedule) for mangoes if he has 7. c. What is the efficient way to allocate 7 mangoes between jimmy and Robert? d. If there are 100 people just like Jimmy and 100 just like Robert interacting in a competitive market, what will be the equilibrium price and quantity of mangoes sold? (Remember, there are 100 of each!) e. What will Jimmy's consumer surplus be?

Answer 1

Demand schedule for Jimmy can be computed using his MV schedule as below: Demand schedule for Robert can be computed using his MV schedule as below: The best way to efficient 7 mangoes between Jimmy and Robert is to look at the allocation in a way that MV of each good is equal. Looking at the given demand schedules, when Jimmy gets 5 mangoes and Robert gets 2 mangoes, their MV is equal and also 5 + 2 = 7 Thus, Jimmy should get 5 mangoes and Robert should get 2 mangoes Equilibrium P = $8 Equilibrium Q = (8 + 5) times l00 = 1300 Consumer surplus = (l/2) (8)(13 - 8) = 20