STEVENS INSTITUTE OF TECHNOLOGY
SCHOOL OF BUSINESS
BT 244-A: MICROECONOMICS HOMEWORK
(Consumer and Producer Surplus)
Please answer all the questions below. You must show your calculations in detail to get full
credit. All graphs and tables should be self-explanatory and labeled properly. You are free to
discuss with your peers but you must submit your own work with your own words. Remember,
no late submissions will be accepted. “Learn economics not for a better grade, but for a better
living…”
Good luck!
1) Amazon has a "Lightning Deal" where it slashes the price of
one item. At 3:15 p.m. today, they announced that the item
was a new tablet with a sales price of $150 which is less than
half the original price. The table contains the maximum
willingness to pay of five college students wanting to buy a
tablet on Amazon.
Student Willingness to pay
Anthony $500
Amanda $400
Lily $300
Francisco $200
Max $100
a) What is total consumer surplus for the five students?
b) If the price increases from $150 to $350, what is
the change in total consumer surplus?
, 2) Consider the accompanying supply and demand graph.
a) What is the value of consumer surplus?
b) What is the value of producer surplus?
c) What is the value of total (also called social or
economic) surplus?
3) For each scenario, please decide whether it results in a
producer or consumer surplus. Then calculate the resulting
surplus.
a) Alice is willing to spend $30 on a pair of jeans and has a
coupon for $10 off. She purchases a pair of jeans that
costs $35 pre-discount. Does Alice receive a consumer or
producer surplus? Why? How much?
b) Jeff finds steak in the supermarket priced at $16 but that he
would have been willing to pay $20 for. The butcher
notices the meat is near the expiration date and gives him
an extra 75% off. Does Jeff receive a consumer or producer
surplus? Why? How much?
c) Nicole has a hockey puck from the 2018 Winter Olympic
Games and puts it up for sale on eBay. She will only sell
SCHOOL OF BUSINESS
BT 244-A: MICROECONOMICS HOMEWORK
(Consumer and Producer Surplus)
Please answer all the questions below. You must show your calculations in detail to get full
credit. All graphs and tables should be self-explanatory and labeled properly. You are free to
discuss with your peers but you must submit your own work with your own words. Remember,
no late submissions will be accepted. “Learn economics not for a better grade, but for a better
living…”
Good luck!
1) Amazon has a "Lightning Deal" where it slashes the price of
one item. At 3:15 p.m. today, they announced that the item
was a new tablet with a sales price of $150 which is less than
half the original price. The table contains the maximum
willingness to pay of five college students wanting to buy a
tablet on Amazon.
Student Willingness to pay
Anthony $500
Amanda $400
Lily $300
Francisco $200
Max $100
a) What is total consumer surplus for the five students?
b) If the price increases from $150 to $350, what is
the change in total consumer surplus?
, 2) Consider the accompanying supply and demand graph.
a) What is the value of consumer surplus?
b) What is the value of producer surplus?
c) What is the value of total (also called social or
economic) surplus?
3) For each scenario, please decide whether it results in a
producer or consumer surplus. Then calculate the resulting
surplus.
a) Alice is willing to spend $30 on a pair of jeans and has a
coupon for $10 off. She purchases a pair of jeans that
costs $35 pre-discount. Does Alice receive a consumer or
producer surplus? Why? How much?
b) Jeff finds steak in the supermarket priced at $16 but that he
would have been willing to pay $20 for. The butcher
notices the meat is near the expiration date and gives him
an extra 75% off. Does Jeff receive a consumer or producer
surplus? Why? How much?
c) Nicole has a hockey puck from the 2018 Winter Olympic
Games and puts it up for sale on eBay. She will only sell
