Nina's Demand

UNIT 3 ASSIGNMENT HINT:

Nina's demand schedule says:

Nina is willing to pay $5 for the first, serving, plus

Nina is willing to pay $4 for the second, serving, plus

Nina is willing to pay $3 for the third, serving, plus

Nina is willing to pay $2 for the fourth, serving, plus

Nina is willing to pay $1 for the fifth, serving, plus

Nina is willing to pay $0 for the sixth, serving, but wants no more after the sixth serving.

It also means that:

if the price was $5, Nina would buy ONLY 1 serving but,

if the price was $4, Nina would buy 2 servings but,

if the price was $3, Nina would buy 3 servings but,

if the price was $2, Nina would buy 4 servings but,

If the price was $1, Nina would buy 5 servings, and,

if the price was FREE, Nina would get 6 servings.

Consumer surplus is the difference between how much a consumer is willing to pay minus the market price. For part c and d. First, you need to look at the table (demand schedule) provided in the problem. If Braden taking advantage of 'all-you-can eat" deal, then the willingness to pay for all servings (6) is $15 ($5+$4+$3+$2+$1). However, you can eat every possible servings (6 or even more) and you only need to pay $12. So your consumer surplus (which is how much benefit you get by accepting 'all-you-can-eat deal) is $15-$12= $3.