Question

There are 100 consumers, each of whom values a concert ticket at a unique whole number dollar amount between $1 and $100. One customer is willing to pay $1, a second is willing to pay $2, a third is willing to pay $3, and so on. An unlimited number of concert tickets are on sale for $15 each. Create a simple demand curve to represent this scenario and using that curve calculate the total consumer surplus.

Answer 1

Answer:

The consumer surplus $3612.5.

Explanation:

There are 100 consumers. They value the concert tickets between $1 to $100. The sale price of the tickets is $15. At this price unlimited tickets are available.

The number of people who will purchase tickets

= 100 - 15

= 85

This is the equilibrium quantity of tickets.

The consumer surplus is the difference between the price that the consumer is willing to pay and what he has to actually pay. It can be found by calculating area between the market price and the demand curve.

Consumer's surplus

= $\frac{1}{2} \ \times\ (100-15)\ \times 85$

= $\frac{1}{2} \ \times\ 85\ \times 85$

= $3612.5

=