Question

Calvin is willing to pay $10 for the first widget that he purchases each year, $9 for the second, $8 for the third, and so on down to $1 for the tenth and nothing for the eleventh. The market price is $3 per widget. How many widgets will he buy, and what will be his consumer surplus?

Answer 1

P	Q
10	1
9	2
8	3
7	4
6	5
5	6
4	7
3	8
2	9
1	10
0	11

When market price = $ 3

Number of widgets bought = 8

Consumer surplus =

(up to the number of widgets bought)

CS = (10 - 3) + (9 - 3) + (8 - 3) + (7 - 3) + (6 - 3) + (5 - 3) + (4 - 3) + (3 - 3) = $ 28