Question

1. the following table describes how much the following people are willing to pay for a cell phone.

name	willingness to pay
daniel	$300
sofia	$600
samuel	$1000

a. if the price of a cell phone is $550, what will be the total consumer surplus in this market?
b. if the price of a cell phone is $400, what will be the total consumer surplus in this market?

1. suppose the following market is in equilibrium. identify the equilibrium price and quantity. label the consumer surplus on the graph.

Explanation:

Step1: Define consumer surplus formula

Consumer surplus for an individual = Willingness - to - pay - Price

Step2: Calculate consumer surplus for each person when price is $550

Violet: $500 - 550=0$ (no surplus as willingness - to - pay is less than price)
Daniel: $300 - 550 = 0$
Sofia: $600 - 550=50$
Samuel: $1000 - 550 = 450$

Step3: Sum up consumer surpluses for part a

Total consumer surplus when price = $550$ is $0 + 0+50 + 450=500$

Step4: Calculate consumer surplus for each person when price is $400

Violet: $500 - 400 = 100$
Daniel: $300 - 400=0$
Sofia: $600 - 400 = 200$
Samuel: $1000 - 400 = 600$

Step5: Sum up consumer surpluses for part b

Total consumer surplus when price = $400$ is $100+0 + 200+600=900$

Answer:

a. $500$
b. $900$