Define are consumers deriving any consumer surplus

Reference no: EM13200933

Suppose the linear demand curve fir shirts slopes downward and that consumers buy 500 shirts per year when the price is $30 and 1,000 shirts per year when the price $25.
a. Compared to the prices if $30 and $25, what can you say about the marginal valuation that consumers place on the 300th shirt , the 700th shirt and the 1200th shirt they might buy each year?
b. With diminishing marginal utility, are consumers deriving any consumer surplus if the price is $25 per shirt? Explain
c. Use a market demand curve to illustrate the change in consumer surplus if the price drops from $30 to $25.

Reference no: EM13200933

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